Just because the word for a thing contains the letters D, E, A and D doesn't necessarily mean that everyone who identifies with what that term describes literally wants that piece of their life dead or killed. That may be true for some, specifically the people who chose that word and popularised it, but the experience of being referred to by your "old" name seems so universal in the trans community that I imagine it's useful to have a concise term to refer to that even if the actual word chosen doesn't necessarily literally express your emotions.
The gaming community is pretty good at using words in ways that are not strictly literal to express or describe. "Owned" does not mean you think someone was your slave. "Noob" does not mean that you think someone is new. "AFK" doesn't necessarily mean that there's a keyboard involved at all, or even that you're physically separated from your control device. And so on. I think we can probably understand how this works for trans people.
If you must have a literalistic way of reading the word, then you can also look at it as a name that is dead - that old name is no longer living and descriptive. It describes the person that was, not the person who is now. Just because someone or something (in this case a name) is dead doesn't mean you have to forget them or necessarily wanted to kill them. Their passing may have been part of the natural order of things. This requires that you read the word as "deadname"-ing rather than dead-naming.
Ultimately, it's a useful word and interrogating the specific elements that make up that word sort of misses the point. Is it worth questioning whether an opponent in CoD really thinks you sleep with your mother, or is it worth simply accepting that they're using a slightly bizarrely worded slur and understanding that they just want to insult you? As long as you understand the meaning it doesn't really matter that much how a word is spelled.