Hi Magrus,
the longer I think about that reincarnation-stuff the less I like it.
Of course, it will be YOUR system and I guess lots of people would like the Idea of not having to make a new char after dying but I can't see the practical use.
Let me explain, why I think that way, so you can follow my thougts.
Wat happens to the player, if a char dies and what happens to the party?
Everyone (except the GM sometimes but that's not the place to discuss bad manners in game-mastering

) is annoyed: The player is upset, because he lost a beloved character in whom he invested time, thoughts, ideas, his heartblood (thats a term which I translated literally so I don't know whether it is used in english)... and before he can join the party again he has to build a new char which means a lot of work. The GM has to create a situation which allows the new member to join, which can be most unnerving (especially if your party reacts as normal people would: Never trust a stranger without good reason) and the party has to cope with their loss. That will be even worse if someone died in the middle of an extremely huge and hard one-way-dungeon... (The usual place to die, I fear

) In the best case there is some high-level-priest/cleric/magician/... around who can resurrect the corpse. In this case you don't need that reincarnation on another plane thingy, of course.
In the middle of this former mentionned veeeeery huge dungeon there would be no use of a reincarnated char who floats around that immaterial plane, waiting for the party to be forced to find him... In this worst case only a dimension-portal, leading directly from the reincarnation plane to the dungeon would be the one and only (and most boring) solution - here it would be better if a high levelled priest/... would walk by eventually and resurrect the corpse which would make the reincarnation useless once more.
And even in situations which allowed the party a little trip to that plane that would break the continuity of the adventure which is annoying, too.
So the only useful situation for your nevertheless nice idea would be a dying char between two adventures... Maybe he would die from a stroke or while training his climbing-skills?

I am sorry but I really cannot imagine one single situation in which your Idea would be of
practical use.
But thats not all: Of course the player will be happy. His (or her of course) beloved character will not be lost. After a little adventure he or she can join the party again and everything will be fine. Death would lose its horror which means that more risks will be taken carelessly. Fine for the players but at least less fun for everybody. One thing I like most while olaying RPGs is the tension. A little paranoya mixed with the fear of dying... For me it would be a loss if I knew: "Oh, maybe I will die if I try to march in and take the dragon's gold but that will be okay since I will come back, soon."
You see my point?
Best wishes
Keltoi
P.s. Pellinore, I was born in 1977 and role-playing since 1992.

If you'd like to exchange experiences I would be glad to talk to you via PM for this might be a little bit off-topic here.