I think we're not meant to trust her explicit wording.
If her goal is to fully break MC's will and resolve, making her think her senpai is fully gone and turned into an abunnimation, MC killing her, only to find out that wasn't the case and she was still "there" inside that new form, would be all the more harrowing and soul-crushing.
Depends on her definition alive, I forgot but does Mass has consciousness/self sentience?
Also it being made from human's remains (as Yue's said), could also mean it's something different from the other rabbit so far, maybe it does have consciousness/self sentience, so being alive is not exactly wrong, Yue just didn't specify in what form.