This same question got beat to death on the NFHS discussion boards last week. Not that there's anything wrong with that...if they say the answer is false then it deserves to be beat to death!
Check out Case Play 8.4.1.G. It describes this exact scenario and demonstrates that the ball is indeed DEAD.
The only time the ball remains live on an intentional drop with the infield fly rule in effect is when a batted ball is hit that actually meets the definition of an infield fly. A bunt does not, and is treated as any other intentionally dropped ball. Dead ball, batter out, runners return.
Also, note that rule 5-1-1 seems to have been misprinted this year, especially if you compare it to how it read for the past few years. The note at the end of the rule, "1. Infield-fly rule (2-19)", is meaningless as a stand-alone statement.
The infield-fly rule....what about it?
In previous years that note included the phrase, "...with the exception of...(the infield-fly rule)", or words to that effect (it was worded differently in both 2006 and 2007, then mangled in 2008). This year, they dropped the "exception" part of the rule, which makes no sense.
So, anyone that misses this question, then checks a 2008 rule book for clarification should really get confused!