"The reason why I say that Cross is truly dead because first, when Allen entered into the dream world and met with Cross, Cross told Allen that he could go with him and they'd basically disappear together, indicating that Cross is dead and if Allen goes with him, he would too. Then there is this chapter which ended with "The words Cross left behind" kinda like his last memories before he exit."
These are pertinent points. I'd argue that we don't know for sure how much of theses words are from Cross. If Cross is dead then this would mean (as Allen stated himself) that Cross is only an illusion born from his weakness of mind and thus all his words actually stem from Allen's subconcious. In this case this doesn't inform about Cross's status, this only means that Allen believes Cross to be dead (and imagines him wanting to disappear with him).
However if those words do come from Cross, well I guess this precisely means that He is Not dead. Unless we think that Cross communicates from the afterlife but I don't think this really suits with DGM's theme and universe. i mean, it IS possible to bring back a soul but, I think this is pretty much shown as violating the natural course of things. The afterlife was never expanded upon, or even hinted at. Everytime a character evokes the thereafter, this is generally about personal beliefs, convictions, and hope. It is not a fact that afterlife exists like in Naruto for instance.
So I'm under the impression that DGM wanna remains in the mist regarding this topic, much like in real life in which noone really has any back-up idea of what is after death.
But I digress. Back on Cross, mangawww.com/manga/dgrayman/222/23 here is what makes we think Cross is alive.
And yep, you're right about Red and Cross. This is a valid point, we can't be sure who is refering to. As you said Cross was aware of the reincarnation plan of Past Allen and at first believed Red to be Past Allen (and much later realizes he may have made a mistake).