Charlie isn't Widmore's son. Widmore only told Desmond that his son (Daniel) wanted to play with DraftShaft which is Charlie's band. Daniel Faraday was always Widmore's son, he just didn't know it. Widmore and the old lady Eloise parented Daniel on the island right about the time he traveled back to set off the bomb. Eloise shot Daniel and killed him in 1979 not knowing he was her son that she was pregnant with. On that same episode we learned that Widmore was his father. Daniel Faraday isn't annoying, he's different like Desmond and Eko. It was f-king awesome seeing him back on the show.
Like you said this episode has put an end to the entire alternate reality thing, thanks to Faraday. Eloise is the key to everything, she managed to play them like puppets all along. Not just that she's not effected by all the madness, she's also masterminding their rat race which makes me think that she has lived through both time lines multiple times. She always directs them to where they should be cause she already has lived through it. She easily sent Faraday to the island even she knew she will kill him. In the first season she convinced Desmond to take that sailing trip knowing that he was going to crash and get stuck on the island. Then later she knew how to locate the island and got the survivors back to the island so they can set off that bomb which created this alternate reality. Its either Eloise is stuck in time and space loop or she is working with the man in black and is trying to set him free off the island. Maybe she is the island herself

Desmond on the fake reality is going to wake everyone up now. Everyone who was on the plane that was suppose to crash. Faraday already taught Desmond how to manage himself between dimensions when he told him to find a constant in the fourth season. His constant then was Penny, his constant now is again Penny whom he just found. He is aware or at least has some sort of an idea of what is going on.
We'll see Micheal on the next one but I highly doubt that we'll see Walt. Just because Walt is alive and Micheal is dead. I know one would think that we can only see the live ones and not the dead ones, but this is Lost and shit don't work like that.