I'm actually loving the post-episode discussion in the DClassics so far. Good funny group of intelligent folks, always interesting to hear their thoughts and personalities.
So yah, I think there are some strong indicators that the narrator is undead in this story, but I'm not so sure that Lovecraft signs, seals and delivers it as fact, and in either case I don't think it's a particular game-changer. There are a few bits i remember when reading it that had me thinking that maybe he was a banished or imprisoned mutant or disfigured abomination of sorts, locked away or even born into some dank basement a la Richard Matheson's Born of Man and Woman
But whether he's a zombie, a ghoul, or a freakish malformed hunchback who's been decaying in a cellar since birth I think is beside the point. Some people think Lovecraft actually wrote it about himself, since supposedly he was pretty self-conscious about how butt-ugly he was. In any case, it's really more about not knowing what you are than anything else, and then tragically discovering you aren't one thing, but two: Different and Shunned.
I'm still undecided whether or not the mirror moment was intended to be a "Twist"' by HPL, or a gruesome, tragic and powerful climax where we watch a monster realize for the first time that it is a monster. I tend to lean toward what Jimmy said on the latter.