It's actually not that hard to beat it without dying. Just save often.
And in the DX version, it simply shows a picture of the sky with some seagulls, and Marin's portrait appears over it with the Ballad of the Wind Fish playing in the background.
Anyway, I've read a manga of Link's Awakening, and in that story it was a lot more emotional... Link tried to neglect his duties as "Messenger of Awakening", so the island didn't have to disappear. But in the end he realized he'd have to defeat the Nightmares and cause the island to disappear, because it would save the villagers the anguish of monster attacks. He felt that as long as he remembered the dream, the island and all the villagers would survive in his heart... Much more heartwarming, although tear-jerking of an ending, in my opinion. XD