I think people are underestimating the rehabilitation possibility of "going to hell".
I see it like this:
1) If actually bad, person goes to hell. Spends X time there. As soon as a res chance is offered they jump at the chance. Now they are back, and are likely willing to do anything not to go back there. Now you have a newly rehabilitated citizen, who will tell every person they can how horrible it was there, and that YOU DO NOT WANT TO GO THERE!!!
2) If they were good, they go to heaven. When the res chance comes up, they decline (after all they are in paradise).
So I think the concept is sound, I could see how some well meaning good people would think "if we expose bad people to the real punishment that awaits them....they will jump onto the team good bandwagon".
So we have a few options here:
a) People are killed, and raised within 10 days.
This is the simplest method, as you don't have to do anything extra to extend the raise dead limit. Assuming hell is truly hell, maybe 10 days is considered enough. Then the person maybe goes into forced community service (to pay back that expense), or maybe if the conversions seem very effective, its just the cost of doing business for this good society to keep its citizens good. Imagine what a crime deterrent it would be to have a few people literred around a city who have LITERALLY BEEN TO HELL, and are happy to tell you how insanely stupid you are to consider any life of wrongdoing with that awaiting you.
b) People are killed, and brought back after longer periods (1 year/5 years, etc etc).
So logistically.... we would need a mausoleum of some kind, with clerics casting Gentle Repose to maintain the bodies for raise dead. As GR is a ritual, we don't have to worry about slots, so a single cleric could maintain roughly 400 bodies (5 bodies an hour x 8 hours a day x 10 days = 400 bodies....with some pad for rest or interruptions, aka we aren't working the clerics to the bone here).
That's doable and still likely much cheaper than housing live people in jail (dead people don't need a lot of space or facilities). Still, considering the expense of raise dead, your probably only doing this for capital or pretty heinous criminals.
Now the real question here.... why are the lords of hell allowing their citizens to just pop back out and "go straight". The answer of course is some devilish scheme, ultimately this idea is doomed to fail....the devils have rigged the game in some way shape or form, which is why they allow it to keep happening. How it all falls down....well that's what the adventure is for!