This can be called a resultative adjective- it describes the guys after the shooting, rather than the way he shot. If you try to take the noun phrase out, the sentence doesn't work:
*He shot dead- no sense
Therefore, I'd say it isn't an adverb despite the postion- you could equally move it to after the noun phrase:
He shot five guys dead.
It does mean that he killed five guys by shooting them.
This is an area where the disticntion between adjective and adverb isn't that clearcut and there is some debate on the issue, but I think the resultative adjective idea explains it neatly.