The "I don't know how I got here moment" is standard isekai, although most retain their memories after transportation/reincarnation etc.
I doubt that what's happening is fake or in Cyrus' head, it seems too real and wouldn't make sense unless explained properly.
Aside from Damion there was their or Cyrus' (girl) friend, whatever her name was, in the flashbacks as well.
We've most definitely not seen "Cooper" for the last time, the time they spent together contained too many emotions and too much information to just end right then and there. It's been, as you say, character development, perhaps even growth but without a doubt did they bond.
For more speculations we need to have presented more puzzle pieces.