Consider: they're still in 1977.
We've been assuming, since Jughead went off, that they were all thrown into the present/2007. We assume this because the Ajira plane is there. But Jughead is there, too. Why is it more likely that Jughead went forward to 2007 with them, than that Ajira came backward from 1977? I see no reason.
Thus, the main storyline is still in 1977. Which means that the Flash-sideways is not just the future...but the new future. The new future they've created by their actions. So, in the main timeline, there are two Jacks: the one we see, who's become protector of the Island, and a kid Jack, off-Island, who will grow up to become the Sideways-Jack.
Think of how much this explains: it explains how dead people can be in the Flash-sideways even if it's the future: because the Ana Lucias are born anyway off-Island, just like they always were. It explains why the Island is sunk in the Sideways; because in 1977/the "main" storyline, the MiB succeeds in destroying the Island.
It also explains why their memories are bleeding over into one another, and why Jack's injuries are, uh, literally bleeding over: because there are two of them alive at the same time.
So, in short, it goes like this: everyone crashes. Everyone goes back in time. They all end up in 1977. In 1977, we have grown-up Jack and Sawyer and everyone, but also kid versions of both growing up off-Island. Then, in 1977, MiB succeeds in sinking the Island. Because there's no Island, when we reach 2004 (when the young Losties are grown up), there's no crash.
In other words, this means that "Whatever Happpened, Happened" is wrong. Daniel had already concluded this when he suggested they detonate the bomb. He believed they could change things with an event large enough. But that event wasn't Jughead; it was the sinking of the Island.
Sadly, this theory has a good chance of being more satisfying than whatever ending we get (BSG, anyone? I'm sure lots of you remember that). But I really like it.
Originally, I thought that Alt-Ben's conversation with his father about growing up on the Island was a hole in this theory, but it isn't -- Dr. Pierre Chang had the Island evacuated BEFORE The Incident, which explains why he would have this memory in the Sideways, even though the Island is eventually sunk.