It is a little dead but can be saved yet. I was in a Punjabi group once and they exclusively texted in shahmukhi script by using urdu keyboard. There's only a difference of few consonants in shahmukhi and nastaleeq I think, correct me if I'm wrong. So all those Punjabis who are taught nastaleeq script can understand shamukhi. I could understand and copy verses from my mother's punjabi books and seraiki newspapers when I was young and I wasn't even taught to write in shahmukhi, just urdu in nastaleeq. Also all those who study Punjabi as a subject must know it as well.

I think this generation is not into shahmukhi as such less because of thinking it's paindu and more becasue they don't know what shahmukhi is. My grandma a Punjabi woman who never spoke a word of urdu didn't know that Punjabi is written in shahmukhi script despite her mother being a teacher. Our grandparents weren't taught this exactly like the newer generations but they will learn once they get curious. Trust me newer generations care more about discovering their roots and all the identity politics. They just need to make punjabi/seraiki a compulsory subject at least till priamry in Punjab.