There were plenty theories, as I read. Well, there was even a theory kids died in journey and the Great Valley is heaven...
I've heard of that one, but not of any that Littlefoot hallucinates. I wonder why there hasn't been any fanfic that runs with that theory.
Huh, y'know, you're right. I haven't seen any such fanfics either.
But eh, personally, would not want to read a fanfic like that, just especially knowing and realizing at the end it was all fake and the events that happened in the fanfic (whether fun or exciting or sad or whatever) didn't really happen. I probably wouldn't like it much with any other show or movie either unless done properly, I feel.
But anyway, the theory kinda explains a lot haha. It's basically why the kids always disobey their parents and venture out, going on fun awesome adventures in the Mysterious Beyond. Because after all, who cares? They're all dead and living their best lives in heaven anyway! If they die doing the one thing they love doing most, adventuring, then there would be zero consequences in heaven.