Question: If this wasn't supposed to be the last episode, was there any plan on how to explain Red Dwarf's survival, or were they just going to ignore the problem, like they do in "Back to Earth"?
Answer: The original idea was that they would do a feature film which would cover subsequent events, but, despite numerous attempts, they were never able to get it off the ground. By the time Back to Earth aired, years later, it was presumably decided that enough time had passed that it was no longer necessary to address the issue and instead focus on telling an entirely new story.
Question: When this episode was written, did the writers know it would be the very last show? I ask because, apart from the Grim Reaper scene at The End, it doesn't seem to be particularly 'big' or 'climatic' as you would expect the last episode of a long running series to be.
Answer: No, the intent was not that it would be the final episode. At the time, the aim was to follow the eighth series with a full-length movie, before returning to television. Unfortunately, despite many attempts, there have always been problems with obtaining the necessary financing, so the series has never been continued. While the possibility of a ninth series has been discussed on many occasions, no progress has ever been made.
Answer: The crew abandoned ship at The End of Series VIII when they thought the ship was doomed. Little is known about what happened between then and the revamped series. All that is known is the ship survived, Rimmer is now dead again and Kochanski left.