I remember many years back reading this topic on IMDB; it was even flat out debunked by a member who had been one of the animators on the film (he had some interesting posts about production, I recall, but I don't think he ever mentioned anything about deleted scenes)!
Someone on T
vTropes even wrote a whole theory that the film was intended to end this way, and each character/event is an allegory for religious followers and the afterlife.
Read it here (it's halfway down the page). Interesting, but certainly not the intended direction of the film. Besides, as somebody pointed out, if they're all dead, why isn't Littlefoot's mother with them(although someone else jokingly suggested that the GOF were in Hell; hence the music)?
I once toyed with the idea of writing a fan-fic of sorts vaguely based on this idea - it would have been many many years after LBT; at the K-T Event. Similar setup; disaster strikes, youngsters are thrown together, except each would be dead (without realising it) and each ends up on their own at some point; confronting a manifestation of their greatest personal failing/fear. If they manage to defeat it, they move on to a spiritual "Great Valley" of sorts.
Basically, almost every character would be picked off, and then the last surviving one would see something that would prove to them they were dead, and stand up to confront the manifestation or whatever, at which point they would move on (not intended to be religous or anything, just a cheesy "twist" ending).
Problem was, in trying to write this I ended up with too many plot ideas and problems(Would "spirits" appear to the dead characters? Would characters who were beaten by the manifestation be lost forever? Should one character survive; perhaps a mammal?), and the whole thing was a mess that didn't make sense.
