I doubt the claim that Chandalas were untouchables because they handled corpses. The more plausible reason is that they were considered as sinners.
Contact with a sinner
The sin resulting from contact with the sinner is equal to the sin of
the original sinner. Still by repeating the mantra ten thousand times
he is liberated from sin.
Linga Purana I.15.14
The word Chandala was used to signify a sinner. Hence he cannot be touched for fear of contracting sin. However, the redeeming feature was that in the Upanishads a person was called a Chandala if his conduct was bad.
Those whose conduct here has been good will quickly attain a good
birth (literally womb), the birth of a brahmin, the birth of a
Ksatriya or the birth of a Vaisya. But those whose conduct here has
been evil, will quickly attain an evil birth, the birth of a dog, the
birth of a hog or the birth of a chandala.
Chandogya Upanishad V.10.7
However, as the Varna system died and the caste system became popular the definition changed. Chandala was now defined as a person born of a Sudra father and a Brahmana mother. So conduct played no role in designating a person a Chandala. He is by definition a sinner regardless of his conduct. Hence he cannot be touched whatever he may do.
The Linga Purana shloka was a loaded gun. At least it was pointed at a sinner as long as the Varna system was working. Once the definition of a Chandala was changed the gun was pointed at a whole class of people designated as a Chandala without rhyme or reason.