3.2 spoilers, blah blah blah.
It's more apparent now than ever that Nidhogg is just a lingering spirit - a true dragon, like Midgardsormr or Hraesvelgr, cannot switch between a (possessed) humanoid form and a dragon form. While dragons having a humanoid form for the ease of speaking with mortals is common in fiction, Nidhogg is the only one who displays this ability here. Whatever Nidhogg is at this point, he is not a normal dragon.
And as always, we lack enough evidence to make an argument for or against Lahabrea still being alive within Nidhogg's eye. Until we have such evidence, given the story presents him as dead, he is dead until proven otherwise.