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Most of the final act of the movie happens in Red's head.

Andy really hang himself that night in his cell. Red couldn't accept it and deluded himself into believing that Andy had escaped, hence the many loose ends like Andy using the Randall Stevens alias after breaking out and why was Andy so upset when Warden Norton decided not to investigate Thomas' claim despite having a escape tunnel built all along (something that would get him in deep trouble if it was discovered -- breaking out of jail is illegal, even if you were innocent of the charges that put you in there). Neither the warden nor the head guard were arrested, but Red did get the conditional. He hang himself on the same beam Brooks used, and met Andy in the afterlife.

    • Too mean-spirited given the overall tone and message of the movie.
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