I finally got around to watching Inception so I'll raise this thread from the dead.

I like your take Steven, but I'm not sure I agree. It seems to rely on too many assumptions - I'll have to watch it again with that in mind.

My take on this film was that either

1 - The "real" scenes in the film are actually real - except for the waking up at the end. By this stage he's trapped in his own dream-state.

and

2 - (My preferred theory). The whole film was a dream. His wife was right. When she "killed" herself she was actually waking herself up and he was stuck in the dream without realising it.

In either theory the fact that the kids faces are seen at the end show, not that he's in the real world, but that he's accepted this real world as his true reality and is no longer fighting it.