I much prefer this ending, though I have my reservations. Happiness, for all of its desirability, is a kind of cognitive bias all on its own. People that are happy are reluctant to let go of it, even partially and even if rationally it would be preferable - say, by extending many times over the happiness of their descendants millions of years in the future.

If the Superhappies were able to make rational decisions despite the saturated happiness, maybe through the Kiritsugus, then I don't see any loss whatsoever for the humans or Superhappies - after all three races merged together, they'd be able to sensibly decide whether the baby-eating custom was worth keeping and whether pain and strife was a necessary component of what makes a human being human.

That's the thing about a scenario that solves all conflicts while retaining all information and rationality - all the sub-optimal aspects of the outcome can be revised later. If superhappy-humans decided that they were no longer human and that there being no humans in the Universe was sadder than there being some, they could very well create some again. Honestly, what is there to be afraid of?