I find it interesting that in your question you seem to think this poem is a ballad. A ballad is a story that is told in song. Most ballads feature simple language and two classic elements of poetry: a strong meter and a repeated chorus or refrain which occurs at regular intervals throughout the poem. Folk ballads in particular, which are passed down orally through the generations, feature stories of true love or domestic violence. They feature certain cliched phrases such as "red, red lips" and "true true love" and were meant for singing.
By this definition, therefore, "The Lady of Shallot" cannot be called a ballad. It is a narrative poem, indeed, but it has not been written to be sung, and although it does have a strong meter and a repeated refrain emphasising the separation between Camelot and Shallot, it definitely does not use chliched images.
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assertion seems to be likewise erroneous. From one perspective there definitely appears to betragedy in this poem. The Lady of Shallot is trapped in her tower, forced to have reality mediated to her by the mirror. When real life becomes to irresistable to be ignored, she invites the curse upon her by looking out of the window at real life (captured in the character of Sir Launcelot). It is this action that leads to her death - her action is never understood however, and her desire to live in reality is what also results in her eventual death. This tragedy therefore raises the question of whether it is better for us to truly live and truly love in the world or whether it is better to remain having half a life, or a life of shadows, even if the alternative might risk death.