A co-worker has convinced me that the bomb didn't go off and The Incident was the drill breaking through to the magnetic field and all the flying metal that happended afterwards. The bright light wasn't the bomb, but a timeshift back to present day.

In the world where Losties are back on the plane and the Island is at the bottom of the Ocean, the bomb went off and destroyed the Island.

But in the world where the Island still exists, the bomb didn't go off. After The Incident (which claimed Dr. Chang's hand) they had to rebuild The Swan station, only this time it was to conrol the energy by pushing a button every 108 minutes.

P.S. I can't wait for the Sun/Jin reunion!