E.B. White wrote, "Be obscure clearly." In this, Ambrose Bierce has succeeded magnificently. To ask for a literal interpretation of a fantasy or a horror story misses the point entirely, in my opinion. It also takes the joy out of reading such fiction. After all, it's not journalism. Certainly you and/or your student can read a cleverly made tale like this and draw your own conclusions.
I'm glad Ambrose Bierce has found his place in the schools. Some students hate the drudgery of having an author, particularly a 19th century author, inflicted on them, but I hope this isn't the case with Mr. Bierce.