@Irwynn Well designed LRE imo!
I definitely agree with your statement that there is a lack of gap closers between builds. I find a lot of it boils down to how the various class talents are class-specific, like "Mage" Frost and "Shaman" Frost spells, or as in this case "Warlock" and "Priest" Shadow spells. It's disappointing, but from a balancing standpoint, I can understand why they would do that.
Using REs to bridge that gap is a good idea, but because of what I just wrote above, it can be hard to make builds that isn't revolving around 1 or 2 abilities because you'd have to spread talent points out across too many things to make it good.
As for your LRE here, the only thing I could put a finger on would be the way damage is reduced when multiple targets are hit. Maybe it could be a 10-15% damage reduction per target hit past 2? So if you hit 3, it's 10-15%, 4 is 20-30%, 5 is 30-45%, etc? And then if you only use it on just a single target, perhaps boost the damage they deal with 10-15%?
I think it's fine to leave Soul Swap at its 25sec CD, but Mana Cost is definitely going to be a big factor since we are talking AoE DoT here. Shadowflame has a 25% base mana cost, but since you're already going to be draining a lot of your mana to build up all the DoTs AND then Soul Swap them off that target to use, I think putting this ability at 25% base mana cost would be well balanced, so you actually need to plan ahead a little before you consider using it. The 10 sec duration on Soul Swap definitely helps with this planning and gives you a gap for you to recover some mana before casting Contagion Breath.
Overall, love it.