EE returneth to the Light House.
It's a tricky question, actually, because you have to ask a few questions about the universe in question that the Shigster has created. I don't think there's any kind of magic in the StarFox universe, but that doesn't completely rule out supernatural happenings.
Think about it though. How much sense does it make for McCloud to just abandon his son? He didn't really have any reason to fake his death beyond doing so to escape and let his son deal with the guys that "killed" him. And if that was the case, he'd have appeared after Fox killed Wolf et al and told him as much.
And I haven't played any GameCube StarFox games so I'm a big ignorant. What were the conditions McCloud appeared under, and is it true that he only appears on Venom?
At any rate, I'm positive he's dead because of the above reasons. However, this leaves a few interpretations as to why Fox keeps seeing him.
1) McCloud is trapped as a kind of wandering spirit, as evident in most ghost mythology, where people murdered or dying with unfinished business walk the earth until they are given closure. He uses this wandering to appear as a ghost and probably acts as a guardian angel.
2) If the Big N is deep enough, maybe Fox has psychological trauma from the death of his father. Maybe his self-worth is low enough that he'd just give up when it seems hopeless, and thus as a kind of mild schizophrenia, he hallucinates that his father comes and rescues him.
And as a sidebar, can someone explain to me why Andross is a mechanical giant head with floating hands? Was that a robotic, bizarre sort of battle ship?
EDIT: Oh, and Numa Dude. I made that avatar.