I decided to revisit this mod a bit ago, and realized: there's nothing to do when you have penance III. However, what if you could go to a new dimension while you wait for the timer to run out?
To get to this dimension, you will need to enter ethereal form, get the Emancipation effect, phase into soul sand/soil, then press the dissociate key. You will then be teleported to a temple-like structure at the top of the dimension. The generation of this part of the dimension will be similar to a plains biome, however the ground will be made of a dark substance that cannot be phased through. There will be souls flying around in this part of the dimension, and these can be clicked on to gain a bit of experience. (after being clicked, they will change color and cannot be clicked on again for 20 minutes.) You can use this experience to place/break a new, glowing block type, with one block needing a few experience points. This experience can also be used to summon an allay or vex. You can find holes in the ground leading to a large cave. Here, you can find many different soulless mobs. Upon possessing a mob, you will be teleported back to above the soul sand/soil you used to enter, however you keep the mob you selected. The mobs with inventories will have various items in them, similar to what you might find in a desert temple. After leaving this dimension, you cannot go back there for a while.

I'm looking at this idea, and it's not great. the concept of a dimension to do stuff without a body might work, but i don't know a good way to brainstorm what to do there.

Now that I think about it, this seems more like something for an addon rather than something for the main mod.