I haven't read the source, so please forgive me if my comments are not quite what you were looking for, but whether Sanskrit was always dead is not really questionable. We can chart the evolution of Sanskrit as a living language all the way back to Proto-Indo-European. We can look at Sanskrit words and grammar and sounds and see how they compare with Latin, Ancient Greek, Hittite and many other languages. This allows us to see how Sanskrit developped as a spoken language, as any other language would develop. The history of the Sanskrit language - at least from a linguistic viewpoint, if not a historical, cultural, or human viewpoint - is relatively well understood. It was not invented, anymore than Hindi, English, Mandarin Chinese or any other language was invented. The fact that Sanskrit was, and is, used as a liturgical language does not mean that it wasn't once spoken, much as Latin was once spoken.
If the fact that we can't chart an organic, natural, normal development from its proto-language is not enough and one still wants to argue that it was invented, under the influence of an older language we can see that this is not a reasonable claim. If we look at the form of the language in the Vedas, we see how much it changes and evolves, within the Vedas themselves, with the earlier Ṛg Veda having different forms to the ones we find in later Vedas. Then, as we move onwards, we see the loss of the Vedic pitch accent, the organic, living evolution as certain grammatical forms are lost and the classical language begins to shape. Even in the Epics, we have a different dialect of Sanskrit, with unusual forms. If you open a Sanskrit dictionary, you will find, after every definition, an indication as to when this form was used. We can see in Sanskrit numerous different dialects and the evolution of the language. It then continued to evolve into the Prākrits and so it grew. If the language was never living and was invented, why did it not stay the same? Why is it not uniform? It is a largely untennable position and is quite a curious idea. Also, from what little our friend greatbear has given us, the reasoning behind the position - the idea that a deliberately complicated language was invented because some evil Brahmins were bored sounds utterly ridiculous. The other thing I would just like to point out is that the Sanskrit language is not deliberately complicated. It is old and, like many ancient languages, retains a lot of cases and other grammatical features which are lost in most modern languages. Certainly, this does make it fairly difficult to grasp, there is a lot to it and - like all languages - it has its fair share of irregularities, too. But it is hardly more difficult than, say, Latin, Ancient Greek, or Old English. I don't know of any rigorous study about how easy any of these languages is for most people to learn, but I have studied Sanskrit and Latin and have looked at Old English. There is nothing about it that seems deliberately obtuse - in fact, if you understand the phonology and have a small knowledge of linguistics, it's actually very logical. I don't find it unusually difficult, I mean it's not very easy, there are probably many languages which are easier to pick-up, but there's nothing that looks artificially hard and - as I say - if you know it's history then it's plain as day that these grammatical forms were not invented by people just to make their lives hard for themselves, there's actually a perfectly logical, traceable devlopment.
Just to add one more thing, in Qureshpor's introduction, he mentioned the idea that the language is 'artificial'. As you can probably tell, I don't think that that's true. However, the great grammarian Pāṇini sought to describe the language as he heard it and to understand it. He was - in some ways - the first linguist, writing a book on his language, just as many people have written books on the English language. However, just like some of the English usage guides you get that tell you not to use the passive voice and when to use 'fewer' and when to use 'less', some people took Pāṇini's descriptive grammar and thought of it as 'correct usage'. So many of the later poets referred to this work, in much the same way that an English speaker might refer to a usage guide when writing his discertation or an important essay, when they wrote their poetry. In that sense, then, there is a certain amount of unnatural regularity, people use a prescribed form, instead of what trips off of their tongue, but I don't think that it's 'artificial', at all, it's the same situation as in English in many ways. A word of caution though is that Pāṇini was doing this for the first time and - genuinely incredible though his work was - some of his analyses are not considered correct in today's usage. This does mean that some of what Pāṇini has to say, some of the verbal roots that he talks about, for example, probably never existed in actual spoken usage. But the important thing is that actual spoken usage there was. It was a living language, a natural language, and one that came into being like any other. It had styles and standards that people later stuck to, which is perhaps not how a language should work, but that's written language for you. It's the same in Urdu, where you have formal Urdu - I believe - and spoken Urdu. I mean, I guess people who stuck to Pāṇini's grammar were like a modern day Lucknowi. (I am told that in Lucknow they pride themselves on their elegant, formal Urdu, but I've never been, so I appologise if I am mistaken about the people of that city, I certainly didn't mean offense.) Finally, yes, Pāṇini did imbue the language with a certain regularity that might not have existed without him, but that doesn't negate the perfectly normal, natural development of a real, spoken, living language.
