Strange, I thought D was the happiest ending of them all. While you know things still aren't going to end up perfectly, I think it's the happiest of any of the endings for all parties involved.
In ending A/B/C the father/brother still has to watch his daughter eventually die of Black Scrawl because it was
never cured, and Kaine is, of course, having some problems as well. A/B/C has the father/brother in that cycle still, he would
probably spend most of his time looking for a cure again, only to come home to Yonah dead one day. In D, at least, he has
saved Kaine as well as given his daughter/sister some extra time to live.
According to that interview, Yookoo thinks D is not the canon ending, though he said there is no "true" ending
and it's up to player interpretation. There was originally an ending "E" that stopped the system all together,
starring Kaine, and it took place after Ending D. Since she ends up in love with Nier/Hero, Kaine is incredibly
frustrated that she can't remember who it is that made her feel that way, and so on. Basically, the Forest of Myth is the
center of that region's "power" and Kaine goes to destroy it, once and for all.
I think Yookoo has some strange fascination with death.