my problem with the "sacrifice Arcadia Bay"-ending is it just doesn't work.
the true antagonist of the game is the universe. fact is, the universe hates Chloe and insists that she must be dead at a certain point. If she's not, then things will happen that will kill her. an early example of this was when she suddenly became stuck in front of a moving train. The tornado is just another expression of this. My problem with the ending is that there's no reason to believe this will stop with the tornado. It's much more likely to keep on escalating. in my headcanon, the timeline that follows after the tornado is that Max has to use her timelord powers to the fullest to prevent more and more catastrophes from killing Chloe, until the universe finally throws something her way that she simply can't handle. like a "wipe out dinosaurs"-tier meteor or something of that magnitude.
another reason why the Chloe-ending simply doesn't work is that it involves Max flat out ignoring the most important and sincere plea Chloe has ever made. Chloe begs Max to save the city, by ignoring this, Max shows that she doesn't care about Chloe's agency and instead chooses to be selfish. Max is infinitely more powerful than Chloe and fully capable of bending both her and events to her will, twisting their relationship into a real nasty shape. Chloe is also going to live with the mother of all Survivor's guilts.
Everything you just described is why I like the ending, though. Your interpretation is 100% valid but it's speculation and it's also assuming that the story should have Max make the right choice. Not everyone comes to the conclusion that the 'fuck Arcadia Bay' option is correct! You might feel that's 100% the wrong choice and I am inclined to agree but the fact that the choice is given, to allow us to come to that conclusion ourselves, is what makes it good. It doesn't have to be a choice with two correct answers.