Peace, peace! he is not dead, he doth not sleep, He hath awaken'd from the dream of life; 'Tis we, who lost in stormy visions, keep With phantoms an unprofitable strife, And in mad trance, strike with our spirit's knife Invulnerable nothings. We decay Like corpses in a charnel; fear and grief Convulse us and consume us day by day, And cold hopes swarm like worms within our living clay.
Our speaker continues with the "Keats-is-in-a-better-place" idea from the last stanza. He argues that now that the dead youth is actually alive for the first time, and that life was just a dream.
It's we who are asleep, he argues. We are "lost in stormy visions" and have arguments with phantoms (like when we criticize the dead).
In another metaphor, he says that attacking those that can't fight back—be they other people or just poems—is like trying to stab a ghost that can't be hurt.
We are the ones who are decaying, because of our fear and grief. They rot out our insides, emotionally, the way death makes the body decay.
Hope grows cold, he says; we become hopeless. This hopelessness is another thing that makes us decay; it eats at our "living clay" (body) like worms eat at a corpse. Eww.