I'd like to think that she became reincarnated after the promised (when Xiao Xiao got healed) that they made.
Maybe the next life? Because the girl was a granny, it was more a dream = past life memory.
THe other option is the classic, the baby survived, only was soul was out the body, late of everything her soul returned at they could meet
Or the option, both are in the afterlife together, she die by granny and when she wake, they are in the heaven together.
But the secret is in the portrait, with both late xiao xiao healed, but is usually impossible that a ghost reincarnated without a body