American officials say he is dead but I think he is not dead. Because there is no any kind of proof or evidence. There is no body, they say they throw his body into the ocean but why didnt you even take one picture or a recording before dispose ofthe body?
Anyways to answer your questions... considering him being death...
Most Muslims are not happy, nor sad about his death. They dont care. He was a radical and dangerous man. But he was away from harming Muslims. So why would Muslims feel sad or bad about his death?
Eventhougn i am sure Muslim officials will say they are happy because reputation on Islam may get better after his death but i dont think so.
Osama BIn Laden considered himself and his organisation Jihadi (a person who is in a Holy War against infadels) . A normal Muslim would not consider himself in a position to Judge anothers religion nor belief. If Osama Bbn Laden says he is a Jihadi, then he would be a Martyr if he is dead. Most Muslims would believe him being a Martyr. You could test it by just sending the dead body to any Islamic country and see what kind of burial they would do for him.