Players are supposed to find that newspaper as early as the “Sir Peter” chapter, and are supposed to be disconcerted about it throughout the rest of the game until the massacre is over. Unfortunately, many players don’t search for documents thoroughly as they play the first time through and so miss out on this extra dollop of dread.

Jennifer explains the discrepancy between that newspaper article, and her survival, in the last chapter if you click on the orphanage name plate on the outside gate:

The Rose Garden Orphanage… That day, I was escorted from the scene by Officer Doolittle. At first, it was reported that there were no survivors… Then, word got out that, miraculously, I had escaped the tragedy… When rumor spread that I was also the sole survivor of a horrific airship accident in which the passengers were all presumed to be dead, the media went into a frenzy. and so, the tragic murder of the residents of a rural orphanage was instantly bumped from the front cover of the daily newspaper to an obscure corner… I’m sorry everyone. You don’t deserve to be forgotten… But I’ll remember you. Thank you all for the precious memories.

Rather, I think what the whole boss battle is is Jennifer’s way of saying, “This is what I -should’ve- done.” Or, “I really wish this had happened instead…”

Yes, and while she’s imagining this more appealing (to herself) way that her past had played out, she even throws in having Brown alive and fighting at her side.

Also, I think you’re right about Jennifer never giving the gun to Gregory in reality, and never even receiving the gun from Wendy. I think that was, as you mentioned in a past entry, a wish-fulfillment portion of the dream. What I believe really happened is that Jennifer hid during the time of the massacre. But, as we’ve seen, it appears she wishes to view herself as…more courageous, I guess, than she really is. (Though she can’t be blamed for being so fearful – she was just a child after all.) Rather, I think what the whole boss battle is is Jennifer’s way of saying, “This is what I -should’ve- done.” Or, “I really wish this had happened instead…”

I give my opinion, about how the gun may have appeared on the scene, in Part 4 of this series of blog-posts.