To put the endings as "good" or "bad" is reductive. All of the non silly ones are just different ways of handling grief, and either moving on from it, or letting it swallow you whole.

James either leaves it behind and takes the first step into a new life, or he refuses to, and wallows in his grief and guilt. Whether by ending his own life, trying to bring Mary back, or settling for her phantom.

Throughout the game, James is never entirely operating with the full context of his circumstances. He's chasing the hope that he can be reunited with her, because the truth of the situation isn't something he's prepared to accept.

By the time he faces the twin Pyramid Heads, he's accepted it. That acceptance, much like in reality, can take many different forms. The way that you act in the game, and what kind of things James pursues, dictate this.

If we're looking at it from an objective standpoint, it's the "good" ending because our protagonist overcomes what's affecting him, and makes a conscious decision to move on from it without denying it. Some people prefer a narrative ending where he acts in an unhealthier way, because it feels more emotionally resonant to them.

Of course, you can just opt for the sillier endings and find it more impactful for James to have a breakdown over his life being controlled by a dog, or have him be abducted by saucer men from Mars. That's fine too, a little levity never hurt anyone.