Hi David, for what it's worth, I don't think you're being over-literal at all. In my view, all rests and note values should be respected throughout this study (including by damping open-string melody notes if they would otherwise ring beyond their stated duration). The beauty of the piece, to me at least, lies largely in the contrast between those melody and bass lines that are broken by rests and those that are legato (such as the quarter-note descending melody in the third section and the bass line at the very end), all of which is completely lost if the composer's careful instructions are ignored.
1993 Paul Jacobson CD/IN
2011 Michael Thames SP/BR