im confusedddd. did he actually die or he was hallucinating?

Sheep mask is dead, finally free of all the life struggles he went through because of the sergeant. On the other hand sergeant is alive, which is the greatest punishment he can actually get. To be alive and afraid for the rest of his life, hallucinating and seeing 'the face' (aka that sheep mask) wherever he go as the reminder of what he has done and how he destroyed someone's life in the worst way possible.