One, it's a red herring as you say, though I'd put a slightly different spin on it. Cobb has chosen his reality, he's had his catharsis and made a very intentional decision to let Mal go. That's true regardless of if the ending is a dream or not.
Two, it's an intentional denial of catharsis for the audience. It's a setup without a payoff, tension without release. Here's the interesting part about that- the audiences I've seen it with provide their own physical catharsis, their own reality-based relief of tension, by laughter or by applause. These physical reactions both release the real physical tension that has built in their bodies and also returns them to the real world, outside of the filmic dream.
Three, it captures the feeling of a certain kind of dream. How many times have you dreamed of almost having the answer, of almost knowing something you want to know...and then abruptly waking up? Yes, exactly.
It's the best ending shot to a movie in quite a long while.
As to feeling that you have the answer in a dream, that's down to the extreme suspension of disbelief the dozing mind is capable of. That suspension was something that a movie allegedly about dreams hardly ever brought up. If some character can dream up bigger guns, and another character a freight train in a city street, then why not more? And why are the defensive projections of the dream's owner so tame, merely human, when they could potentially be changing the whole world? And if being weightless at one level creates weightlessness in the next level down, why isn't it transitive? And wouldn't dreaming that the entire building / local area / whatever starts accelerating skywards at 9.8 meters per second per second restore gravity? Why can't that manipulation be used as "the kick"? Seems like a simpler manipulation than what the architect was up to.
But I don't think the top is evidence of that. At the level of reality in which the plane ride occurs, we've seen the top fall. Consequently, it seems clear that, in the last scene, the top will fall, and we do see it start to wobble before it cuts to the credits.
The question, then, becomes whether the top actually is the reliable indicator of reality that Cobb thinks it is. If the top really is a totem, then Cobb made it back to the real world. But where did the top come from? He got it from his wife after she died. If his wife really did escape from a dream by dying (if Cobb was dreaming the whole time, this is possible), then Cobb acquired the top in a dream, and whether it falls or not proves nothing.
I'm pretty sure that I'm reading too much into the ending of the movie. Personally, I think he made it back to the real world. But the director has made other movies that invite a similar degree of scrutiny, so who knows?
At least this is how I read it. To be honest I didn't really think the top made a lot of sense but I think this is what it was intended to mean.
Only this one is placed in the mind of the viewer.
That's the most absurd rationalization I've heard all morning.
If you go back and watch the movie again, there are a number of clues that the entire movie is a dream (mysterious, nameless agency chasing Cobb, the sudden importance of an irrelevant power company's heir, Cobb getting trapped between closing walls as he flees, etc.). In fact, that when he finally "sees" his children they start out following exactly the same scene he kept hallucinating seems to be the bigger giveaway. In any case, why does Cobb insist that seeing their faces will mean he's really awake? That sounds like the kind of nonsense one might believe in a dream.
I disagree..
Remember Africa? He was in France, then in Africa, magically. Dreamy...
Remember how he escapes from his "enemies" stuck between two walls? Typical of a dream.
And then magically, Saito appears to save him. Again, typical of a dream. The whole movie is a dream, at the end he allows himself to see his children face because he's at peace, but he's still dreaming.
That plus reality in Hollywood films is seldom very real anyway and usually involves cuts to faraway locations.