Yeah, that was my big issue too. I was stunned. I had heard the rumours that Picard was going to die, so if any of the principals was going to get offed, that was the one I expected.
The timeline issue is a non-issue, I think. Don't forget in the "All Good Things" future 'Admiral Ryker' chose the Enterprise D as his ship and it was destroyed in Generations. Q was pulling all of the strings and only Picard had memories of what happened. Even if Q's future was happening within the regular space-time continuumm once Picard told the crew of his experiences, their future changed because they made decicions that would take them down a different path. Remember at the end when Picard joins the poker game and they talk about not growing apart?
OMG I just reread that last paragraph. I feel like such a nerd! :)