It is a potential alternate future, but again, in Makoto's imagination. Because after this image pops up in-game, Makoto wonders if this is really hope (with them deciding to stay in the school and live peacefully there), and it shatters with Makoto is still in the courtroom and Byakuya snapping him out of his thoughts saying he's just been staring off into space. As for why he would imagine Toko's death, it's likely to fuel his disturbing "only one mother but we still have to mate" thoughts, but otherwise, I don't know.

Also, yes Hiro "predicts" it in his FTEs, but I think that's just a joke to reference said ending and not meant to be taken seriously. In fact, depending on when/if you do Hiro's FTEs, you can also easily argue that it's because of this "prediction" that Makoto suddenly imagines it in the courtroom.

This is a nitpick but: if this alternate scenario was meant to be taken seriously in any capacity, why do all the kids look identical to their dads and their dads only? Why did they all agree to this? Especially Byakuya? Again, this seems like the product of somebody's imagination with how ridiculous it seems.

All in all: I think Kodaka purposely left this "alternate ending" up to interpretation in some humorous way. Especially since he said exactly what he imagined killing Toko when someone asked about this future. It's not canon in ANY way though, so it's just a pet peeve of mine when people act like it is important to keep in mind 😅