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I think it was either speculated or explained in 3Ds that when the nobody and heartless of someone that would have had both are destroyed, their former body and consciousness is restored to what it was prior to them becoming a nobody/heartless. Yen Sid talked about it at some time in 3Ds.
Obviously we don't have a definitive answer to your question yet but some have theorized that since we saw Master Xehanort in DDD that Terra reverted back to his old self as well. It's either that or TerraNort is alive and we'll encounter him at some point or another. It's a pretty big gray area for the time being though.