The time loop, if we accept it as the answer to everything, doesn't work, period. If our existence is the linchpin that holds the entire fabric of our modern reality together, then our death at Ghimlyt Dark in Exarch's timeline means that the timeline should've ceased to exist because we weren't alive to go back in time and set the pieces in place. Unless Exarch happens to go back in time to do all of that instead, which is impossible for him to recreate considering he's... not us. In fact, it shouldn't even have been possible for us to be killed at Ghimlyt Dark at all if this is the case.
This now gives us a potential of two loopholes to this:
Either we didn't ACTUALLY die at Ghimlyt Dark in the bad timeline and everything turned out to be a lie
or
Everything would've happened in the past exactly how they did without our intervention, including us being Hydaelyn's chosen
The latter is a pretty popular assumption, but that raises a huge issue; if that's the case, then WHY OH WHY did they settle for coming up with a paradox instead of explaining how things would've happened naturally? Surely it couldn't be that hard. Have us go to Elpis as an instanced zone as a passive observer instead of part of everything, with the flower being Hydaelyn's message for us to find out the truth instead of her getting us to literally create her. Then they could give us some real lore on how and why "Hydaelyn" was ACTUALLY created. I mean, they managed to do that with Zodiark by having Hythmet's memories be erased, why not have Venat also lose her memories and settle on Hydaelyn naturally? Why was Zodiark summoned because he was going to be summoned anyway, while Hydaelyn was summoned because we told her to?
All in all, it was just a ridiculous and unnecessary plot point. I don't think I'll ever understand why they did it, and even if they do manage to make it "worth it" by covering these loopholes somehow, I would've much rather had it been that we were a passive observer and Elpis wasn't used as one of the six zones in the end. Hell, could've saved another zone for Garlemald's capital. Just absolutely boggles my mind, what were they thinkig?