Terrako creating a made-up world to save a different Zelda than the one he wanted to protect still doesn't make sense. He went back in time pre-Calamity to save the Zelda who awoken her power in the beginning of the game. To prevent her experiencing what she did, the prologue, aka, the canonical scene in BOTW where Zelda awakens her power protecting Link.
King Rhoam tells Link to keep an eye on the "time-traveling Guardian", hence Terrako altering scenes and events like the cutscenes with the Champions, the courses Link and Zelda took, etc.
I agree, it is fishy how Link wasn't already acquainted with Daruk before meeting him, but it isn't clear in Daruk's diary in BOTW how far back they met. It could've been a few months before Zelda recruited him, which could easily fit into AOC's timeframe, so I don't consider that hardcore proof of an alternate history like Link not having the Master Sword.
What's your theory for Link not having his sword in this "alternate history" Hyrule that Terrako went back to, and nothing else being changed?
The "creating a new world" explanation in AOC is the only thing that could support your theory, besides the blatant contradiction of Link not having the sword, but the story is still presented as one of time-travel from the beginning.
Also, why do you think Revali got upset when finding out Link was Zelda's knight despite other knights being assigned to her, despite there being no proof at that point that Link was the Chosen One?
It's especially weird when Daruk and Mipha discuss not knowing who the chosen knight is, when Revali apparently does.
Well, I never thought of Terrako literally creating an alternate Hyrule with alternate history when going back in time. The story doesn't suggest that, really. But again, I do think it's a good theory to explain all the plotholes in AoC, and I'm glad I heard it from you.
I just can't stand when Nintendo retcons things.