I agree with
Rem would have used past tense when referring to Sakuya instead of present.
and
It doesn't make sense for Sakuya to be dead if Remilia is coming in there saying "don't lay your hands on Sakuya."
I think it's fairly obvious that Sakuya's not dead, but is in a bad state, yes.
It's interesting that with this and "Lonesome", which are supposed to be FlanRemi, both establish pretty clearly that Remilia loves Sakuya, and that Flandre gets jealous of the latter for that. Emotionally, neither story is properly FlanRemi at all.