That’s the way I’ve been thinking of it, yes. Bae went back to FTL, instead of coming to our world, and because he went back to FTL, there was no need for Rumple to have the Curse cast, which leads to an AU situation where everyone (including a civil Regina, and a Belle that’s not locked up) is hanging out together in FTL.
Except that doesn’t explain why Aurora and her Prince was running scared or even with the old group. The change of clothes and what about no Emma and Henry are you saying Henry was never born?