Skyloft was once a part of Hyrule? Never heard that before...
And as I said in my initial post, this was just my interpretation of the end. It's just safest to say Link is accepting Zelda ascendance. Why else would he bow to her like that--minus the proposing bit?
I think that scene is the Bird Rider's Ceremony that was mention during E3. Notice how that Link and Zelda are still in their Skyloft clothes. It fits perfectly with the scene where Link catches Zelda and heads off to Skyloft. It has nothing to do with Zelda leaving Link to Hyrule as Link is supposed to have a green tunic while Zelda has a white cloak near the end of the game. And beside, why does Zelda goes to rule Hyrule while Link stays in Skyloft? Doesn't make sense for all of the Hylians to go to the world below, especially if Skyloft were to fall upon Hyrule at the end.