The title actor, Ryan Kwanten was keen to emphasise in this Collider interview that Griff isn't mentally unstable. It follows that a bit of stress and grief would hardly be likely to lead to a psychotic break or freeform hallucinations:
Q. Did you approach him as somebody who is delusional, or did you approach him more as somebody who’s developed this little world to
deal with how everybody treats him?
KWANTEN: The latter, definitely. I didn’t see him with any kind of mental disorder, at all. Maybe he has a little bit of socio-phobia,
but outside of that, it’s more just someone who had chosen to embrace
his imagination, and that just evolved over time.
In this interview with Quickflix, the Director (Leon Ford) seems to strongly concur:
SM: And a few years later, you starred as Hamlet on stage, and he
certainly has his psychological issues that he’s working through.
Griff is not at these extremes, but he’s suffering from his own
delusions. I’m interested in what fascinates you about these types of
LF: Well, I just don’t think they’re that far from any of us. Paranoid
schizophrenia is probably one of the most tragic diseases you can
have, and not something I’d wish on anyone. The sort-of lesser
extremes – delusions, whether by choice or involuntary – the playful
side of us is suppressed too much or hidden away. We’ve all got
something inside of us that is playful that we suppress because it’s
considered immature or silly. We get used to conforming and appearing
we’re all normal, but I don’t think anyone is. I think everyone is an
eccentric, and I hope a film like Griff celebrates that, rather than
makes people feel ashamed of it. Obviously there is a dark side to the
spectrum and a light side; and I seem to get a lot of those characters
[like Hamlet] but I think there’s nothing wrong with it
The implication is that Griff is fully capable of distinguishing his fantasies from genuine reality and therefore what he sees at the end of the film is the literal truth.