Shutter Island... can someone please help clarify?

If you review the movie closely - the movie itself gives clues as to whether Teddy was actually delusional by using fire and water. In the beginning, Teddy is noticibly disturbed by water and water either in the form of rain, wetness, blood, etc. plays an important part in the movie showing what is real or where sanity is attempting to break through. Fire on the other hand is used to represent delusion - death of wife by fire, scar faced Laeddis (fire place), Noyce as the informant (lit matches) (versus Noyce as the patient beat up by Teddy/Laeddis because he called him Laeddis), doctor in the cave (fire), Chuck's body (this is very subtle - the cigarette is the fire where Teddy believe he see Chuck's body on the rocks below the cliff; the ocean water reveals that it is just the light coloring of the rock when Teddy climbs down). Water is reality/sanity because it represents the drowing of the kids by his wife and wife covered in blood (contains water), flashback of german officer moving of gun out of reach, having to swim in water to reach the lighthouse (symbolic of Teddy's breaking of his delusion). The question at the end implies that Laeddis has broken out of his delusions but he cannot live the knowledge that he killed his wife and ultimately his chilrden because he ignored his wife's depression/insanity therefore he chooses lobotomy to escape his anguish, i.e. he would rather die as a good man (unaware of his deeds) then live as a monster (aware of what he did and set in motion).