The movie is kind of ambiguous about this for there is at least one scene in which the right eye of the sharptooth is opened after the chasing of Cera and Littlefoot through the thorny thicket (namely in the scene where Cera is charging the presumed death sharptooth). The main idea of sharptooth's loss of one eye during the chase and his following pursuit of Littlefoot being partly motivated by thirst for revenge was brought up in a land before time book of 1988. This is what the book says about the purchase of Littlefoot and Cera by Sharptooth:
Sharptooth was at their heels, and they could feel the ground tremble. Littlefoot and Cera cowered in the center of the brambles, thinking they were safe, but Sharptooth chewed and ripped through the twisted boughs. Littlefoot could fel the monster's hot breath on his tail. Leaping up to get away he got caught in some thorny black branches. Sharptooth bore down on him with evil glee.
At the very last moment Littlefoot freed himself. One of the hard thorny branches snapped back and hit sharptooth right in the eye. The monster bellowed in pain and reared back from the brambles. Then, with a terrible fury, he plunged back into the thicket, searching for the puny creature that had dared to injure him.
Just a few sentences later it reads:
Closer and closer the monster came. Although one of his eyes was swollen shut, he was growling softly, enjoying his moment of revenge.
The scene in which sharptooth chases Littlefoot and the others out of the sharptooth footprint includes the following line:
With another terrible cry, the big beast thundered toward them, his enormous mouth wide open and his one good eye glinting with hatred.
During the scene of the final fight with the sharptooth the book says:
Petrie saw what was happening and he whistled in fury as he once more zoomed at Sharptooth, landing on his head. He put one wing over Sharptooth's good eye and held on for dear life. [...] Petrie was getting tired holding on to Sharptooth's face, and his wing fell away from the monster's eye. Now that he could see what he was doing, Sharptooth roared in rage and charged at the rock wall - and Petrie.
Illustrations in that book also show the Sharptooth with only one intact eye. It seems very likely that indeed the idea (though not explicitly mentioned) existed for the makers of the movie, for there are many scene in the movie showing Sharptooth with only one intact eye.
For another
thread about the original movie's Sharptooth Kacie made a collage of images from the Sharptooth showing him with just one "normal" eye during the scene of the final fight:
In any case I totally agree with you that the original movie's Sharptooth is dead.
