I don't remember precisely -- I never owned a copy, and probably I read it within a year of its initial publication; that is to say, more than 37 years ago. But I know I didn't misinterpret the "shrank and vanished" language back then. I'm confident that what I read was different: The coffin/torpedo is seen to burn up.
Well, really, unless they were tracking it with remarkably good telescopes, they couldn't actually have seen it burn up, since it would've been too small and distant to see. So provided the text was written from the characters' POV rather than an omniscient narrator's, then the viewpoint character might have just assumed it burned up and the text would still be accurate. After all, nobody knew it hadn't burned up until Saavik and David detected it from Grissom's bridge.