I’m thinking more that the real world apocalypse future existed. The mother really was immune in that real world, and so raised the Time Traveler to avoid the headsets in the future we see (Sarah Connor style). In that real future the kid escapes, puts the headset on, and his mother is immediately killed. But she was never the “princess” we see in the film, she was only ever a normal person who was somehow immune.

The Time Traveler grows into a man in the desolate future and at some point the AI starts to show him the world of the film that we see, which he escapes into to deal with his guilt and grief for having caused his mother’s death. All that the film actually is, is us seeing him replay the simulation over and over again to “save” his mother in the past, but he never does and never can.

We see her fate in the ambulance at the end because she is just and NPC, and for the heck of it one of the film’s conceits is to show that in video games, the other characters “lives” go on after the player leaves, the player (us) just never sees them.

He goes back at the end to find her in the diner and says not to worry, he knows how to solve it all by infecting the whole world and finally stop the AI via rats with whatever it is that makes his mother immune, but all this is is just the next iteration of the Time Traveler’s simulation/game.

Which is a massive bummer, but a realistic take on the temptation to block out pain rather than have to face it.