I think the boy died in the last.
I thought of this because I think that the imagination was everything for the boy, and after everyone made him lose his imagination, the boy felt empty and lost his will to live.So he went back to the sea where he was free to imagine anything and died.
I also felt that Tedsuka wanted to tell the people from the story that these were the things Japan had done when World War2 happened.Japanese army forced the people's way of thinking. I think Tedsuka wanted people to know it is a bad thing to force people to change their thoughts and imaginations.
