I think that the ending has a very positive message but it is still very depressing.
I don't know if anyone interpreted the movie in a different way but it is basically a gangster story with kids. When someone gets hit with a cream pie it's supposed to symbolise death. In the end of the movie all the characters get hit with cream pies except Bugsy and Blousey which means that they are the only ones who survive. I think it's especially clear when you reflect upon the lyrics in the last scene:
We could've been anything That we wanted to be Yes, that decision was ours
This song is supposed to give a positive message to everyone left alive, trying to make them understand that there's no point in killing each other.
I've always been kind of puzzled by the pie thing, as some people were dead following a pie, but then in that ending scene almost everyone gets wiped out, even the poor janitor guy that hides in the cabinet.
I like your interpretation, though. It makes sense in the context of the film, but I still don't know why they're singing if they're dead.
I totally agree with this because, if you notice, the only other person who didn't get any pie on them (besides Bugsy & Blousey) was the kid playing the priest.
Also, in that final number, you can see a few (if not all) of the people who "died" earlier in the film.
1) "They all died except Bugsy and Blousy": the rest reflect on their lives (with that the final song the OP quoted "you're gonna be remembered..."), that the whole gang war was a waste but this was the lives they chose, as the two heroes escape to a new life that THEY chose. The point? Crime doesn't pay.
2) "It was just a movie": up until the end, the pies etc. were played 'straight'; being splurged meant you 'died', etc. Suddenly, at the end, it degenerates into pure kids' fun and a 'real' custard pie fight where pies are just pies. The characters themselves realize that fighting is silly and instead just have fun, calling an end to their "mob war". Fighting until everyone is dead is pointless, so they make peace and celebrate. The final song is them realizing that they could be "anything they wanted to be", not just mobsters in a film who kill each other.
I always leaned towards the latter as a kid, but can see both as an adult. Either way (or neither) I LOVE this movie. Probably the best kids movie ever made, too.
There's a documentary on YouTube about the making of the movie. Alan Parker (who wrote the movie as well as directing it) explained that being hit with a pie, or shot with one of the splurge guns, didn't kill a character. It simply meant that said character was "out" (as in a game). This takes the sadness out of it, at least for me.
Wasn't there a freeze-frame every time someone got hit by the splurge gun? I've always thought that was a device to solve the problem of getting rid of someone without seeing them actually dead, which would be too gruesome for a kids' movie, or seeing them still alive, which would make the splurging pointless.
But I must say, the scene where Dandy Dan treats one of his henchmen like he isn't there, prior to splurging him, is actually rather chilling!