Technically speaking, no it does not have to be alive.
Yes, the person who is considered a weigh station has a cert. scale and would fill out the paper work accordingly..they would also act as the witness.
You also need to submit an accurate picture or two along with the fish, as well as measurements.
To be fair, if you wish to be a catch and release angler, while still getting pins, you can get the town you live in to cert. your scale. Call your town hall to find out who does it and/or set up an appointment. They do a test to make sure it is accurate and then apply a sticker valid for one year. Costs like 50 dollars.
You can then download/print the papers and fill them out yourself if you fish with a buddy they will act as your witness on the banks and you can then release the fish immediately after photoing it, weighing it and measuring it.
I've done this for the derbies I hosted as well as friends before in the past. This is a far better option in my mind for the welfare of the fish, especially if you do not drive or have a livewell etc.
I had sent an email to masswildlife before anyone answered and they responded with this.
"Daniel, thanks for taking the time to learn about our Freshwater Sportfishing Award Program. Let me answer your questions: 1) Currently, we only have a weighed component for the program which requires that the fish be dead when you transport it to the spot to be weighed (any location with a certified scale). We hope to have a catch and release component in place by the 2014 calendar year which will allow you to get a length at the point of capture and release the fish."