My feeling -- heavily influenced, admittedly, by the literate and well-reasoned arguments of ClancyPants -- is that there's no question about how Jack died. He died the way Lureen described it. The reasoning:
-- The idea that Jack died via homophobic violence we see enacted only in Ennis' mind.
-- Ennis himself was primally affected by an episode of homophobic violence.
-- How would Ennis have any idea about what "really" happened? All he's doing is extrapolating from what Lureen told him. So it's natural that he might leap to a conclusion based on his childhood. Even his imagined tool of Jack's death -- a tire iron -- comes from what he experienced as a child, not necessarily what he knows to have happened in reality.
-- Most important, from a literary perspective -- the perspective that supports the theme and the point of the story -- it makes more sense that the violence occurred in Ennis' head, rather in the real world. One of the major themes of BBM is that homophobia affects not only bigoted straight people but, often, its own victims, destroying not only lives (Jack's) but souls (Ennis'). Ennis was both gay and homophobic. It's more interesting to show how Ennis is permanently crippled by his culture's attitudes toward homosexuality than to show that people in conservative communities in the 1980s were often, duh, homophobic. Cinematically, the former interpretation also is reflected in the scene with Jack and Jimbo the Clown: are the guys around the pool table really talking about Jack? We're conditioned to think so. But actually, we don't know this, we just assume it based on what we know about bigoted small-town types of the 1970s. Again, it's an illustration of how a closeted gay man in that culture (like Ennis, definitely, and Jack, to some extent) is conditioned to automatically think the worst and to constantly have to worry about what people on the pavement are saying. It only makes sense that AP would have been aiming for the deeper, more complex and interesting depiction.
-- Aside from, arguably, Aguirre and Alma, nobody in the movie ever says anything explicitly homophobic with the huge exception of Ennis. Including Mr. Twist, BTW. So for characters to act on homophobic attitudes is less in keeping with the rest of the movie than for people to act in ways that are ambiguous but, from the perspective of a closeted gay man in 1960-85 America (i.e., Ennis), appear ominous.
Agree? Disagree? Keep the posts coming!