In an infinite universe, anything and everything is possible and real. However, OWI have said that Oddworld is in a parallel dimension.
A parallel dimension is no better or worse than saying parallel universe. It's the 'parallel' that is wrong: it should be 'alternative' or 'different' but, although correct, just doesn't sound right. Parallel dimensions are not to be confused with parallel timelines, which exist at different points along the probability axis, or 'timefork'.
I'm more than just an Oddworld Encyclopedia as you can see. But the bottom line is, Oddworld is not in this universe/dimension. It is, luckily, in this plane of reality.
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