So what happens exactly when you win by the altar of luonnotar? Does the One come back and gets rid of every other civ, or gets rid of all the other gods? Anybody know the story?

Whisks away the civ who built it, leaves the rest of creation as is.

To drive this home, Kael was talking about setting it up such that if an opponent, be it an AI or another human in MP, won an altar victory, his empire would just disappear from the map and the game would continue without it.

Seems logical with the slideshow

That's very interesting. That would be very cool actually, to have the civ disappear from the map!

Now I see why people compare it to the spaceship victory. Errr or is that the tower victory :lol:

Though, if all it does is wisk you away, why would rival civs feel threatened by the altar and declare war on you once you get close to the final altar?

Only the Evil Civs will, and only if not already at war. That is due purely to RP reasoning. They don't want you to get any closer to "The One" and possibly make him take notice of how his Angels are misbehaving.