TheGame, I would recommend seeing Freddy vs Jason in theatres, even if you haven't seen the old movies. Also, the old movies of Freddy at least would be scary if you were like 8 years old probably. Jason never seemed very scary to me back then though.
And Jonbo, I don't think they're hinting at a sequel, it's just that they can't have one of them blatantly win. I thought everyone knew that there was no way one of them would actually win, the Freddy creators and Robert Englund and the Jason creators wouldn't let their character lose to another character.
And the movie is about a child killer who got burned and then kills people in their dreams competing against a big dumb guy who never dies. Yet, Freddy being alive after his head got chopped off doesn't make sense?

There doesn't really have to be an explanation, Freddy's like magical and stuff.
Edit: Or maybe Jason went back into sleep mode or whatever after going back into the water for the last time, and Jason coming out of the water with Freddy's head is actually Jason's dream. And as we all know, Freddy owns dreamworld.