I didn't say that all denizens of Faerie possess souls--only some of them. They would probably come in two categories: those immensely powerful beings at the heart of Faerie, who may be among the oldest of all (however many cycles of reincarnation they've undergone); and those who were once mortal, but who have chosen to enter the Faerie Realm.
Note that the multi-step process of Transformation certainly allows the soul to be unchanged after the mere alteration of the physical body.
Research into the Limit of the Soul is, after the Limit of Warping, perhaps the most important of all the so-called "Lesser Limits" needing to be addressed. If nothing else, once those two have been overcome, Magi will be able to control the cycle of Metempsychosis/Transmigration posited and embraced by a number of Mystery Cults and most certainly many Merinita and perhaps Bjornaer (to say nothing of Ex Misc) Magi.
One special Virtue I introduced years ago was Old Soul (available only to Magi and Companions). The text of it read:
[i]Bound up in a cycle of endless reincarnation, you are eternally died the grace of Heaven--and forever beyond the grasp of Hell. You have lived many lives before, and will live many again, at least until the End of the World (and perhaps beyond, somewhere else). Echoes of the past sometimes intrude on your present*, and you often feel connection to others with Old Souls, as well as old friends and adversaries who endure from long ago.
Those with Old Souls may not possess Divine or Infernal Virtues. They are apart from both Realms, and beings strongly associated with either--Angels or Demons--may recognise that the individual with an Old Soul is "different". Divine and Infernal-related Flaws are generally unsuitable as well, though one can be Demon-Plagued to represent a persistent enemy who enjoys tormenting you life after life (one with Old Soul cannot, however, be Demon-Tainted, because Infernal corruption can never take root).
Magi with Old Souls do not succumb to Final Twilight. Should they reach that level, they are instead cast back to the Wheel to begin again, though they may first journey through the Magic (or Faerie) Realm, vanishing from the world for a few generations. Some may potentially be reborn as either a being of Magic or of Faerie.
*The Visions Virtue is free to all those with Old Soul.[/i]