I realized something. If in order to avoid the lost soul being discarded, you make it return to territory regardless of battle outcome then I think that could be abused more than the other. Especially since its multicolor.
I play Failed Objective and get my soul/character back. Then I play Bel's Banquet, Joseph in Prison, Achan's Sin, Korah's Rebellion, etc and keep getting my evil character back. If the defeated language is removed then I get back after AotL, AoC, Sam's Edict, etc. I'm not sure if it would work with Death of Unrighteous, depending on the order of battle resolution but regardless that could get pretty crazy.
With a speed deck that could be the only evil character you need.
So that leads me back to saying let it be discarded and just print it after you print a sufficient variety of soul gen cards.