"It seems to me remarkable, and remarkably unremarked on, that the "Let her go" stanza must be an interloper. How can it possibly refer to a dead person?"

I always took it that the first two lines instruct the doctors to desist from reviving her, and for Big Whats-is-name to let go emotionally. The last two lines are purely self-congratulatory.

Part of the customary New Orleans jazz funeral ritual is to "turn him/her loose" at the burial site, or (in modern times) at a point where the hearse leaves the larger group of mourners and speeds away to the cemetery with a small contingent of immediate family.

This represents a moment when the assembled friends give the departed over to the spirit world, cease mouring, and find the abiliity get on with life. This is the point at which the band stops playing dirges and immediately moves into uptempo street-parade mode (often making a U-turn at the same time, to lead the congregation back to the point of origin, or to someplace where a repast will be served).

So, to me, the words "let her go" in this song refer to movement from the final phase of the mourning process to recovery and getting on with one's own life. Almost like "forget about her," but not in any dismissive or unkind way, simply to "move on."

It's the next (certainly self-congratulatory) lines that, to me, couldn't possibly refer to a dead person: "She may search the wide world over / and she'll never find a man like me." Perhaps the lyricist lacked the requisite skills in semi-advanced English grammar to have put it something like this: "She could have searched...but she would never have found..."