The Red John episode with McAllister didn't fit any of the previous 120 episodes. And more importantly, it didn't fit with My Blue Heaven.
Then Heller describes Red John McAllister as a Wizard of Oz character in an interview and Kim Fischer talks about dream worlds on the beach. But Heller also says Red John is dead, several times. He says its past that point.
So in short, Red John is dead, but the episode with McAllister never happened. There was an encounter with Red John between episode 7 and 9, but I presume its being saved for a 2 part finale.
Brett Partridge clues cropped up before the episode, during the McAllister episode, and are even cropping up in My Blue Heaven, which is very cruel.
So, the finale will be a flashback of what happened, and how Red John was actually killed. It will be set between episode 7 and episode 9.
