If the Death Egg could time travel, the ending may have been Sonic (or Tails, whomever) setting it to intentionally travel back in time, crash into itself, and cause a time paradox that wiped it from existence and reset everything. My guess is now that boarding the "Neo Death Egg" from space and beating it simply triggers the ending where this becomes possible. Or it could be some chaos emerald/time stone type paradox too. Maybe a Super Sonic only dues ex machina ending? Boy, this rabbithole of info keeps getting deeper and deeper, but I think you're really on to something here. The evidence and the diagrams match up reasonably nicely, and those last 2 bubbles appeared to be the present Island restored to their original form.