In the Never Sleep Again documentary they talk about the ending. Craven wanted Nancy to wake up on a bright sunny day and just walk away. Bob Shay wanted a "hook ending" and he got it. Craven said he felt bad for doing it but because New Line was the only way to get the film off the ground so he gave them the ending that they wanted.
I've always thought of it that the end was just a dream that Nancy had, that her mom and friends were still alive, but in reality they were still dead. After seeing the third one, we know that she stopped dreaming with the hypnocil so it could be inferred that she started taking it right away after the first one.
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