Do you have proof that an alternate reality exists? I highly doubt it. You use this alternate reality to try to explain something that is unexplainable. You say that this doesnt fall into the first category but it does! The universe has always been around! it just changed form! this is what you are saying. In the same way, the 2nd Law of Thermodynamics applies to all energy regardless of form.
Just because the universe is expanding does not make it an open system. The universe is not gaining any new energy, just expanding the energy it already has.
There are many explanations such as universes within universes, a spiral universe within endless black holes, etc. We do not know. We do not know what is throughout the entire universe, therefore, we do not know if it is an open or closed system. In an case, if it is open then there are numerous possibilities that I do not care to explain. If it is closed, then we can assume the answer I gave a while back:
The Big Bang theory states that there was a sudden burst of energy and matter that began expanding since the dawn of time and is still expanding at an unknown rate. Therefore, even as the entropy increases, the size of the universe also increases to accommodate this, and many other, changes.
Think of it like a party in one room of the house (a house that could expand indefinitely I suppose). More and more people come, rearrange themselves in the room, and it becomes more and more disordered. However, this house is constantly Getty new editions and as the party goes on, people move into other rooms of the house and diffuse. The amount of entropy (people) can stay the same or increase but there will always be enough room to accommodate them in a house that is constantly expanding.
Here is a better explanation from Mano Singham:
"In more technical terms, if we consider the universe to be a sphere of radius R that is increasing, the maximum allowable entropy increases as the square of R, while the actual entropy of the universe increases less rapidly, only linearly with R. Thus even if the initial universe was at maximum entropy for its size, as the universe expands its entropy can increase while still being easily able to accommodate the increasing order we see. In fact, calculations done assuming that there exist ten planets per star, 100 billion stars for every galaxy and 100 billion galaxies (which are our best current estimates) show that the ordering of the planets produces changes in entropy of only one part in 1011 of the total current entropy."
With that explanation, yes, we are heading towards an increasing disorder and randomness but the universe is continuously expanding as well. Therefore, we can see an increase in order and entropy within the universe that can go on indefinitely unless the universe can only expand to a certain amount, at which point, the best guess is that the universe would simply collapse into another super dense particle. We obviously have not reached that point though.
You say that the same amount of information has been around forever, how does this explain how new species of animals came into be? If the first living thing had all the information to become every living thing we see today, why didnt it just reproduce into everything we see today?
Evolution through natural selection. That is, the evolutionary emphasis of traits that already exist to the point of specificity deemed to be a new species. Google for more info, I am too lazy to find where I said all of this before.