as far as I know miyazaki is alive and still 
working on projects (although not in as active 
a manner as he used to)

she may have been confused since Princess 
Mononoke is touted as Miyazaki's last major 
project. but last spring break my friends 
actually saw him in his studio. so I'm pretty 
sure he's alive.

as to why Totoro is so popular... well its a 
wonderfull, heartfull film, with wonderfull 
details of shots, storytelling and character 
animation. ALOT of people studying or 
currently animating are HUGE fans of 
Miyazaki, and they often will do alot to find 
themselves that perfect cel, or what have you.

plus alot of regular joes just love Miyazaki too 
becuase his films are so easy to relate to, and 
so heartfelt.

like kiki's delivery cels, people love jiji, so cels 
of him are HARD to find even though he's in 
the whole movie all the time practically.

same with totoro.