Did Iva die at the end?

Well, there's no proof he died, but everything seems to point that way. He ran out of the pills that his father made for him, so I can't see how he could have survived. However, it seems Smilebit wanted to keep this a mystery as well, just as what happened to Edge at the end of PD Saga.

Iva says "But the only thing I could think at that time was that humans created something so beautiful." about the Ancient device that created a rainbow. Does this mean the Ancients were human?

Well, although this might seem like proof, we have to take into consideration that the Empire always believed that the Ancients were human. That's why they claim the Ancient's technology belongs to them. Iva was an Imperial, so it's likely he was taught that the Ancients were human too.