Statement 2 with have is a better option as in statement 1, all of whom seems to refer to burial mounds, which obviously is false. Had it been, the pair 'had realized' then 'had lived' would have been more appropriate than 'have lived' as we won't use the present perfect ( have lived ) to talk about an action that was completed before something else that happened in the past (had realized). So here, since they realized while the mounds were being entered, we'd better use have lived.
New words, one handy idiom, and a 2-minute quiz — delivered to your inbox to keep your streak alive.