I suppose you have a point; I guess free levels/bonus EXP isn't that big a problem since all it does is enchant items and whatnot. If there were an actual level up mechanic, this would be imbalanced, but with the way Minecraft's EXP system works, I guess there isn't any real harm.
That said, rather than actively add "player souls", it might just be a better idea to add larger, higher-denomination EXP orbs that could be rare drops from players killed.
That would be a great idea