The theory that events in LOST are simply the hallucinations of one of the characters is virtually universally despised and rejected as a possibility. First of all, it would fly in the face of a vast fan base that has invested years in watching individual character development, only to discover it was just the imagination of the same autistic child of "St Elsewhere" fame. Even Bobby Ewing would prefer to wait out that backlash in the shower. This is why demonstrating the plausibility is such wicked fun!
With apologies to Rod Serling, I submit for your consideration a short story first published in 1890 by Ambrose Bierce entitled, "An Occurrence at Owl Creek Bridge". In addition to being a "Twilight Zone" classic, it has also been referenced in LOST, specifically the episode entitled "The Long Con". This short, but poignant tale describes what happens to a man condemned to hang in the instant between the fall and the end of the rope (http://extend.unb.ca/wss/1145demo/owl2.htm). Ironically, it was Locke looking through this particular book in the episode, a bit eerie given his ultimate fate.
The concept that the human mind can construct intricate designs bordering on reality lends credence to the theory, especially when supported by the oftentimes incredible coincidences that surround the characters. Could the ghostly encounters with people who couldn't possibly be on the Island, the ancient architecture and the Smoke Monster, be the final, collective hallucinations of dozens of people dying in the aftermath of a plane crash? Another book adds support to the possibility, plus a few other connections to LOST.
"The Third Policeman" (http://en.wikipedia.org/wiki/The_Third_Policeman), written under the pseudonym Flann O'Brien around 1940, was not published until 1967 and has also shown up in the background of LOST. Without giving away the story itself, there are some interesting parallels between this tale and LOST. There is a vast underground chamber where time stands still, significant numbers, and an anything box from which anything you desire can be produced. While these parallels may be intentional "red herrings", the state of mind of the narrator begs the question, What exactly is reality if not what we directly observe and experience? Is THAT what the open eye at the beginning of many episodes implies?
Then who's doing the hallucinating? Hurley would be hardly the twist we're looking for, so it would have to be more intricately unexpected. One possibility is psychic Miles as part of a recovery team, trying to salvage the final thoughts of the corpses to determine what actually happened to the plane. "Get anything?" asks another team member who looks mysteriously like Richard. "Nothing, just gibberish...," The camera pans away from the open eye of Jack.