Well, IMHO, the ending was clearly in the "real world" and not in the dream world. The top was clearly
starting to wobble/lose its balance at the end, but I do hate it when the endings are left somewhat "open" like that. I guess all we can hope for is that Nolan comes out and says what his intent on the ending was either in an interview or DVD commentary.
But, to me, the top was clearly and audibly begining to fail before the screen cut to black. The ending may have, actually, been a bit better if we got see it actually fail.
As for the kids not looking older? I chalk that up to movie shrug-off. We're given little to no indication how much time had passed between Leo leaving home and the events of the movie, from the phone-call he has with the kids early in the film it seems that only a fairly short ammount of time had passed, possibly less than a year.
I will say that it is odd that the police/FBI wouldn't have been watching his father or the children/monitoring calls in order to track Leo or that he'd even be considered a suspect as they'd likely be able to figure out the Mal had jumped to her death. (I also suspected it was a "u shaped" wing of they were in and Mal had simply walked around the ledge the window oppisite the room she rented.)
But as far as I'm concerned, unless an interview says otherwise and even then I'm likely going to keep with my own interpretation, the ending of the movie is in the real world. Or, rather, as much of the "real world" as we thought we were in the whole time. For it to be in a dream world would sort-of make the whole movie kind-of pointless.
I also want to say that this movie, coupled with The Dark Knight, has made Nolan one of my favorite current movie makers.