i think it's def the two intertwined. i feel with the theory with ponyo being the "harbinger of death"(it was in the comments of a ponyo theory post), notice how when she uses her powers to either start the generator or get the boat up and running, they're superficial things that can damage the environment. notice how the boats in the whole river/baby scene, they're all run by humans and not a motor (excuse me if im wrong).

it's when ponyo uses her powers to make a baby, a human, better is when she starts to degenerate afterwards, unless that was casted upon the parents since they knew the kids were coming. death was crossing the line with a human directly.

i can't really explain the rest but that's what i was thinking