Absolutist

In the absolutist's world, we have one life to live, and if you sin in this life, your soul suffers in hell for eternity. It seems like the punishment, in many cased, does not match the crime. And if you are righteous and holy, you go to heaven. But what if you're average? You do not do evil, yet you are not really righteous, where do you go?

In the more modern view, embracing reincarnation, whereby one's (spiritual) path is to serve G-d, to bring oneself closer to Him. Upon achieving sufficient closeness, one is no longer trapped in wheel of Samsara and reaches "heaven".

What of the evil person? Does it make sense to imprison his soul in hell? How will that redeem his soul? If he is truly evil, and cannot be redeemed, would it not make more sense to destroy his soul completely?

We might not have much choice regarding many of the things that occur in our lives, but we do have a choice as to how we relate to them.
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Earth - waystation

Earth has been described as a school or academy of learning where you study the theoretical aspect and earth is where you do your practical fieldwork. But, even more than an academy, perhaps earth is essentially a place of transit point, a way-station, but not an "earthly" one, as in a railway of airline station, but a spiritual one. Think of it as a place that is part of a longer journey, and is thus like someone alighting onto a train (being born), and then getting off at another station (dying).

As a station of change, we arrive with our soul wounds. They manifest here, the place where spirit has incarnated. The way in which we deal with the specifics of what these "imperfections" produce, will determine which station we disembark.