Although story-wise, the death ending works much better than the one in which Alpha 1 survives. That's obviously my opinion, though.
Robert Loggia does such a great performance as Admiral Petrarch that both ending cutscenes are excellent, but still the "grim" version of the ending works much better IMHO.
Obviously I died when I first time played the mission, I was toasted by the supernova about two klicks from the node... but despite that, I didn't feel like I had "lost" the game, I didn't feel disappointment in that regard, although I later played the game and beat the final mission. The happier ending just doesn't carry the same emotional load as the other one does.