I think that he may have been having the cab fantasy while the cops were rushing in and Bickle was about to go to jail. Everything about the last scene in the taxi seems too perfect, like Cybil Shepard’s character all of a sudden wanting to be with Travis again and the newspapers regarding him as a hero. But the real way to find out the answer would be to ask Marty Scorsese himself.
Just like in Once Upon A Time in America, Noodle’s trip to 1968 could also very well be all in his head. Leone himself said that it was all an opium trip intended for Noodles to find some kind of closure and to help him get rid of the guilty feelings. I always found the whole “opium fantasy sequence” idea very intriguing and it helps add to the mysteriousness of the film.
