Rabbits are weird. They have an almost uncanny ability to "wall off" infections, which can make the infections very difficult to treat. It actually isn't unusual for a doe to retain a kit. I am not a vet, but I have almost 30 years' experience with breeding rabbits. If I had had this doe at the vet yesterday, the treatment I'd have opted for would have been a dose of oxytocin (pitocin). This is the hormone that causes uterine contractions. Since the doe had just delivered one dead kit, it's quite possible that the hormone would have helped her to expel the other kit.
Frequently, when a doe retains a kit, the kit's body shrivels up inside the doe, and becomes a "mummy." Fetal mummies can act almost like IUD's, preventing the doe from becoming pregnant (at least on that side). Over the years, I have had does deliver a couple of these mummies; they are strange looking things, indeed!
The only part of this that troubles me is the doe's weight loss. Most of the rabbits I have known don't even weigh 9 pounds; that's a huge amount of weight for even a Flemish Giant to lose! Antibiotics are tricky things to administer to rabbits, because a large part of the rabbit's digestion depends on the beneficial bacteria that live in their digestive tract. Since antibiotics aren't specific as to which bacteria they kill, the loss of the intestinal flora can lead to diarrhea. Most people give beneficial bacteria (Bene-bac is one brand) at the same time to try to offset the loss due to the antibiotics.
I can't promise you that you won't lose this doe, but I certainly wouldn't kill her if she's eating and otherwise acting reasonably normal.