Shadow Ushio is effectively dead. Even if Ushio never died in this universe, she wouldn't have those experiences, so Shinpei's goodbye is true and meaningful.

As for everyone else's, only Shinpei remembers all of that, so I guess it seems like "a dream" ending, except dream endings suck because the entire struggle was meaningless. Here, the struggle is the precise reason the horrific ending can be considered just a dream, so the two shouldn't be conflated.