Re: Does Red Ring Rico survive?
That is a good site, but I wouldn't take it to be the gospel truth on all matters - he holds rather simplistic interpretations of events on some points.
What you see when you kill Falz on a difficulty above normal is her body, not her spirit. Compare her release to Flowen's from Olga, he's orange and sparkly and clearly a spiritual form whereas she's not.
Also this from the DC version when you beat Falz on the hardest difficulty: Rico appearing before Tyrell and Irene to their surprise
I know in a different it shows them looking sad sans Rico, but that's if you manage the relatively easy task of completing the game on an easier difficulty. You can choose which continuity you'd like to play in.
PSIV takes place in AW 2284, PSO in 3084 AUW. That's 800 years. This Falz has been theorised to have other reasons for existing.