I think the ending is several things at once, which is why I like it.
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.
My personal catharsis was a grunt of "hmph". For a split second I considered the "question" of the spinning top - is this real or not - then noticed that I didn't care, that it was a banal and uninteresting question, because the question relied on its very existence for its interestingness, as either answer - it's a dream, or it's the final reality - were both cop-outs, were both unsatisfying and cheaply done. "It's all a dream" is the most childish of story resolutions, while the idyllic literal interpretation of the shown ending is unacceptably saccharine for something purporting to be adult entertainment.
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.
The sequence where he sees his children seems decidedly like an alternative ending to the sequence we've been seeing the whole way through the film. This already made me suspicious, the spinning top then seemed confirmation that you are not looking at reality.
I agree that the scene in which he sees his children's faces is suspicious -- everything after he wakes up is a bit convenient. Cobb breezes through customs, Michael Caine's character is right there waiting for him, and his kids are right where he left them. It's certainly plausible that Cobb is lost in a dream.
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?
I haven't seen the movie in a while now but I remember Cobb or maybe Mag placing the top inside of a safe, spinning it, and locking it up while they were in limbo. The top would appear to spin forever at in dreams closer to reality or reality itself because of how much slower time flows at the lower levels. However, the top will not spin infinitely. It will eventually stop when it finishes spinning in the deep nested dream reality, therefore I don't think it is necessarily a great indicator of reality if it topples over or not because it will stop spinning eventually.
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.
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.