If it has live roots, I would say yes, it will be fine. Underwatering is much more easily recovered from than overwatering. As to the empty sheath- it could be empty from the stress, it could be empty because the sheath forms first and then dries while the buds are forming, or it could just be one of those plants that throws blind sheaths from time to time- my Rhyncolaelia digbyana does that all the time. Don't go overboard with the watering now.. those old pbs may never plump up again, but the new growths should be fine with better care.

Here is a link to a pic. of the orchid in health. Posted by Shirley over on the gallery. Apart from having some live roots the plant needs some live growth eyes near the bottom of the pseudobulbs.

Here is a link that might be useful: Lc. Dinard 'Blue Heaven'

Thanks for the responses, I'm hoping she will recover because she is a very beautiful hybrid.