Gordon Fink-
Your analysis of Marx's utopian end of history gets us into a hotly debated point of Marxist ideology (as I'm sure you're well aware). As you stated, some Marxists believe that the authoritarian state will wither away and leave behind a self-managing collective of free men prepared to simultaneously accept their place within the whole and exercize almost unlimited personal freedom.
Other Marxists, however, read Marx's theory of historical evolution (especially the movement from industrial capitalism to the dictatorship of the proletariat and finally to true communism) as being a conditioning process whereby man transcends freedom and individuality. These communists agree that the state will indeed die naturally, but it will leave behind a self-managing collective of people who are seamlessly integrated into the whole and for whom individual liberty is of no concern. (See Eugene Zamiatin's "We" for an excellent critique of that proposed scenario)
Looking at historical trends it's hard to disagree with the latter camp. Increased industrialization, urbanization, communication, travel, and the greater interdependence they require/create have through the ages eroded every aspect of personal sovereignty and if society continues to move in its present direction some form of mass colectivism seems almost inevitable. Marx would agree. However, if that process becomes centrally managed and enforced it's difficult to see how it would prepare men to take full control over their own lives. If some of a set of conditions has made us the pathetic whelps we are today, why would even more of it turn us into Übermenschen?
It's also worth noting that the main passage cited by Marxists of the first camp to support their ideas is the "...hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner..." discussion from "The German Ideology". Being that this was an almost entirely polemical work with a major goal of drawing people away from individualism (Max Stirner's "The Ego and Its Own" was published the previous year and was generating much discussion) it's difficult not to wonder whether this portrayal of the end of history was disingenuous.