The weirdest thing is that you don't reincarnate, a new, completed body is created. That's clearly magic, but is that really reincarnation? I think reincarnation means you're literally reborn. You're not going on adventures unless your comrades are ready to change your diapers (assuming you even reincarnate in something diaper-using). Obviously, such a spell would be mostly useless and probably doesn't to be part of the core rules, but it feels without that, it isn't really reincarnation.
All the afterlife stuff in D&D tends to bother me. If a person's soul isn't some absolutely indestructible thing that maintains the continuity of your existence, it just doesn't seem to be philosophically a "soul". Because I think the fundamental idea behind the soul is the belief or hope that there is something beyond our body that is our true self, a thing that can never be gone entirely, something that "lives on" even if our body is long gone and no one remembers us anymore.
If you take that away from a soul, and allow it to be consumed, disintegrated or whatever, you are still positing an end to the existence of an individual, and if you're already okay with the idea that people can be truly gone, you don't really need the soul concept. Demons wouldn't need to use souls to create demon larva, they could just transform humans, for example.
The only thing you might do to a soul is put in a different body, in hell, or in heaven, maybe in "limbo" or other waiting state from which it will return, but it will never cease to exist. But if you allow it to be destroyed or dissolved, you kinda defeat the point behind souls.
Obviously that's just my take on it, but if I am building the cosmology, souls are eternal and immortal, no one is literally eating souls or transforming them into demons, at best they are temporarily borrowing them (and maybe torturing them) for their purposes.
