you have less space after some reincarnations
That's not true – it's just a bit more difficult to see why. Before you reincarnate, you have to empty your reincarnation cache completely. And because of this, the maximum space the reincarnation cache can hold in practice is exactly the space you can free up in your inventory to make room for loot and questing. And idk about you, but for me that's usually around 100 slots. This amount can never be higher than that free inventory space.
And for that small advantage, you have to empty your reincarnation cache every life. The problem with that: this additional space the reincarnation cache provides can also never be smaller than that – no matter how much free character bank space SSG gave us, even for free.
The point in the end is that the reincarnation cache was a bad idea from the beginning, and most likely just a band-aid, because Turbine wanted us to lose Kundarak bank and inventory space after a TR and make us reacquire it again. But exactly that isn't necessary. There are several things you unlock permanently – even account- or server-wide – with favor, so it would be a very small concession to let us keep that space.
And if you ask me, I can certainly live with around 100 less space if it means I never again have to deal with that annoying reincarnation cache. Those 100 slots also don't generate revenue for SSG, so they have no financial interest in keeping the system – rather the opposite, because the reincarnation cache is something they have to maintain, and in the past they already put a lot of unnecessary work into it trying to improve its performance, add a search function, and so on.
And by the way, when I say a TR could work like an ER or LR regarding your bank and inventory space, this could also mean you simply keep your current reincarnation cache – so there's no pressure on you to empty it, and you keep that additional space for all the items you want to hold on to but have no use for in the near future. The only difference would be that no new items go into your reincarnation cache anymore after a TR.
But the cleanest solution I would suggest to SSG is this: you no longer have to empty your reincarnation cache after a TR, and all items from your current reincarnation cache and your character bank are moved into (or remain in) your character bank. This way the reincarnation cache disappears the moment you TR the next time, and you lose no space compared to the situation before the reincarnation. Your character bank will most likely exceed the amount of space it can normally hold – and you would simply only be able to pull items out of your bank (not put new ones in) until you are back below the space your character bank can usually store.
Even better for SSG would of course be if they ran a routine that moves the reincarnation cache on all characters into the character bank. Then the reincarnation cache could be completely removed from the DDO code with a single patch.