Just as a theory...

It's possible that the First's balance favoring Light (even BEFORE the Ascians started messing around) could be why Pixies and Fuath form there, and do not on the first. Perhaps the heavy Light aspect causes Aether to flow more sluggishly there. Upon death, rather than quickly being absorbed into the Lifestream, the souls of children and drowned linger for a bit, giving them a chance to reform into new forms before dispersing.

That doesn't really explain why OTHER souls don't also linger and reform. Perhaps they do, and we just haven't encountered the sort of creatures that are thus produced.