First, I have to say I'm saddened by the whole defeatist attitude many of us took on (Not me, this kinda got my juices going) and that I think there is a way for us to pull this off, even if it would be very difficult.
However, I feel that the way all the players are reacting, I don't think we really can, because everyone beat themselves before they could even start.
I am in favor of the Retcon, on the grounds that it is our best chance for going out and completing the objectives of the plot, something that I, as a GM often hold high above the ideals of reality or circumstance.
However, I still believe the ball was not dropped when Kotori died, it was dropped in the way many of the veterans reacted, Harsh as that may sound coming from me.