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Okay, so to keep on your theory:
Oceanic 815 crashed and we saw that many of the people did indeed "die" upon impacting the water, even though they'd already entered the land of the dead. So those people were instantly able to move on Dead: Level II, or their version of the AR. Meanwhile, for whatever reason, our beloved Losties and the Others and anyone else roaming the island were on Dead: Level I and being run through a series of tests, doing their best to avoid dying (again) and advancing to Level II.
But once they ultimately died and moved on to Level II, they constructed a common reality so that, together, they could walk together into the big bright light, advancing to Dead: Level III.
Tell me again how this is smoother than the popular narrative?