So: degrees of death, as if you could be just slightly dead or all the way up to deader than hell. Great vernacular touch there.
I heard it said by many men of my parents' generation. I never heard a woman say it.
I've corresponded with a poet- and publisher-friend in North Carolina who remembers hearing the same phrase, so it's apparently not regional. (My uncle was a native of Indiana, where he drove a car for a boot-legger, among other things, before moving to California to run heavy equipment, etc.)
Probably, it's not a phrase that will survive the Boomer generation, a few of whom might still say it.
A similar but more widespread phrase was, of course, "deader than door-nail," which I never liked because door nails are inanimate. I did, however, like the rhythm and alliteration.