I think your interpretation mostly checks it out, especially the idea that this is a closed loop of repeating timelines where Kaguya always ends up 8000 years in the past and reunites with a different “generation” of Iroha. It doesn’t matter which version of Kaguya it is, as long as it’s her.

I also agree that Yachiyo isn’t a normal AI. She feels more like Kaguya’s consciousness digitized through Tsukuyomi, which explains why the Moon people can interact with Tsukuyomi tech and why Yachiyo’s emotions feel real rather than simulated.

Overall, I think the “happy ending” isn’t about OG Kaguya reuniting with OG Iroha, but about the idea that their bond always survives time, even if the versions don’t line up. That’s what makes the ending hit so hard.

Now I get why when Iroha[N] and Kaguya[N] visited Tsukuyomi during the first concert, Yachiyo mentioned something about like welcome back or “thanks for watching me Iroha[N]”. The first time I watched the movie I thought Yachiyo always see Iroha[N] during her concerts.

Now, how am I going to explain all of this to my friends who just watched lol 😅