About the ending - SPOILERS

I thought he was lying. While in the house Tane was the one that convinced the samurai to leave him alone. She might have just changed her mind, but there is no indication that she would have set it up. Although she does seem to have become much more bitter in this film.

As others have replied, Otane did not betray Zatoichi. As Tanakura was dying, he said it was Otane in a last attempt to hurt Zatoichi. In reality, it was Sakichi who set Zatoichi up.

I just watched the new Criterion release, and it supposedly has new and improved subtitles, so perhaps the original DVD releases had subtitles that were more ambiguous. But even without better subtitles, just look at Otane's face when she see's Zatoichi and realizes Tanakura was going to kill him, and you'll realize that there's no way it was her. Therefore, it's surprising how even the essay that accompanies the Criterion boxed set, written by film scholar Geoffrey O'Brien, got it wrong. He writes: "...he meets...Otane, who (in Zatoichi the Fugitive) betrays him, even as Zatoichi persists in refusing to credit her betrayal." It's a shame O'Brien wrote that, because Otane truly loved Zatoichi, and her character, which was featured in two films, was one of the most well developed women in the entire series.

Below is the new and improved Criterion subtitles and a description of the scene for anyone who still needs convincing.

It begins with a scene where Sakichi says to Zatoichi, “You know a woman called Otane? She’s been caught by Yagiri. They’re using her as a decoy to lure the samurai to their side.” Sakichi then leads Zatoichi to a dilapidated building.

When Zatoichi enters the building with Sakichi, Otane gasps in surprise “Master Ichi!” The camera holds on her as she looks completely stunned with her mouth agape, then the camera pans to Tanakura, who says “Good work” to Sakichi. Zatoichi says, “So that’s what it is. The trap is for me. Otane, are you with them too?” Otane replies, “No, no!” as she shuffles in his direction, with no indication whatsoever of being less than 100% sincere. In the same shot, she immediately spins around to grab Tanakura by the lapel, distressed, exclaiming, “Why are you doing this?” He tosses her aside, saying, “Ichi, be happy. The price on your head is up to 300 ryo. The one who offered the prize is Sakichi here.” He goes on to say, “It bothers me that you’re alive. Understand?” The two square off, and as soon as Tanakura puts his hand on the hilt of his sword, Otane cries, “Wait!” in an attempt to stop him. But then Yagiri shows up outside the building with his men. Tanakura yells out to him, “I’m taking the 300!” implying he is going to be the one to kill Zatoichi. Once again, Otane runs up to him, saying, “Stop. Please, stop! Please stop,” and, this time, successfully gets him to reconsider. Tanakura yells to Yagiri, “Okay, do it (i.e., kill Zatoichi) if you can. I’ll stand here and watch.”

That ending was really ambiguous, I guess this thread cleared some things.