No, stead is still a word
The fact that you don't hear it "on the street" doesn't mean it's not a word.
One particular form of it has become a separate word (ie- instead) simply because it's the most common place of use in a sentence, but it can be used in other ways. The example you cite is a perfectly acceptable use of the word. You only use instead when there is absolutely no possible ambiguity about the object in question.
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