I'm actually enjoying having my expectations of the show challenged and rearranged with each episode. It keeps things interesting, keeps my mind working.
Of course, there's always the possibility that the writers are just really sloppy and don't know what the hell they're doing, but such a view just seems too cynical. At that point, why put my faith in any show to take risks and pull them off well.
My own take on the shows mystery has evolved with ever episode. At first it was up in the air whether both realities were real, or they were both figments of Michael's imagination -- maybe he's in a coma, maybe he's the dead one. I always suspected, though, that the realities were both real, that they were created at the moment of the crash, and that each variance in the experiences of others he runs into were caused by changes that happened at or around the same time; one timeline becomes two, and from that moment, the butterfly effect causes the divergent details between the two realities to take effect.
That seemed to be confirmed when we started seeing the side players get their own spotlight -- if it's all just Michael's imagination, why are we seeing his wife and son do things without him around? I think the writers goal was to cause that exact confusion in us. The therapists seem to be the voices of reason in each reality, tell Michael (and the audience) that the other reality is just a dream. Now the narrator comes in and says all is not as it seems. They are BOTH wrong. Both realities are real. And they let us tangle with the implications of that.
And now, after episode 4, we can't deny that the divergence in the timelines happened LONG before the crash. If the evil doctor/homeless junky wasn't hint enough, the vastly different fates of Rex's babysitter are confirmation. So, we're dealing with two living breathing realities that have been different for a long time, and Michael is only just discovering those differences now with his "condition."
Wanna know what I think? I think Michael died in the crash, and in order to escape true death, his consciousness latched onto other versions of himself from parallel realities. Dead Michael is only "alive" when he is awake, so he lives vicariously through one version of himself, and when that version sleeps, he jumps to his other waking self. The problem is, that bond with his parallel selves is causing him confusion, and they're experiencing what HE experiences through their dreams.
So, yeah. All possibilities are true. Michael did die. And he lived. And all realities are true. And he is experiencing them as dreams.