This is basically what I settled on after reading through all the lore AMAs and Tyrants bio in MxM, it's pretty similar to your own with a one big divergence.
We know what was supposed to go down before the game closed so my own headcanon is that Live servers went through the coming storm and defeated it in the method it was laid out in the Lore AMAs/MxM and intended to occur by Paragon Studios. Tyrant pretends to be statesman and serves as the symbol everyone needed, rallies everyone, and they win. The End
New shards are alternate realities where for reason x, y, or z, those events haven't transpired yet, if at all