I recently watched "Happily Ever After," a sixth-season Desmond-centric episode of Lost. I think it offers more evidence (which, admittedly, I'm seeking) that the altaworld is a real, physical place, created by Jack and Faraday's plan to set off the bomb at the end of season five.
This is the one where Widmore exposes Desmond to enough electromagnetic energy to kill a normal person. Desmond survives (as has happened before--I don't know if Desmond was born special or gained this ability by being in the right place when he used the failsafe key) and has a vision. Or is it a visit? While he's out, he sees the altaworld. Now maybe it's possible he's seeing something that happens after dying, as Juliet might have as well, but since he survives no worse for the wear, he didn't seem to be near death. (Juliet was also exposed to a lot of rays of some sort as well, let's not forget.) Furthermore, Desmond is the one person we know with the ability to become unstuck in time. His consciousness can slip back and forth between real places. This would suggest his trip to altaworld really happened, and it's a real place that exists as an alternate timeline (somehow out of time) and isn't just a vision of what will come after he dies.
In altaworld, the different-Desmond babysits Charlie Pace, who "awakened" on the Oceanic flight. He forces Desmond's car off the road and
Later, he meets Eloise Widmore. Eloise is definitely awake. She's met Desmond before as he traveled in time. But if this were a conventional purgatory, why would Eloise know any more about what's behind it than anyone else?
She tries to keep Desmond from finding out about Penny, because he's "not ready." She apparently doesn't want him to blow the cover of this world, so, I'd guess, she can finally get to hang out with her son. Which brings us to Daniel. When he sees Charlotte, he's inspired to write equations he can't understand. Equations that deal with imaginary time--not imaginary as in after death, but imaginary as in the square root of negative 1, as in a separate timeline created by something like a nuclear explosion. You can't get a bigger hint than that.
Now I realize the producers may have been trying to mislead us so we couldn't figure out the ending. But you can't simply throw out everything that happened in the altaworld. Even if the question's never been definitively answered, I'd say there's enough evidence to believe that this is a real place created by The Incident. What happened was the Losties made a world where they could meet one more time and work out their problems, before going out and resolving the time paradox. And who knows, perhaps if Eloise had her way, that paradox would never be resolved.