In the beginning, long before the events chronicled in Genesis, God created good and evil. Then, considering Himself to be good, and not wanting to be a hypocrite, he saturated all of his creations with fundamental goodness. Every part of the celestial substructure contains tolerances, biases and loopholes, such that no being living in that early creation could be harmed. This is the real purpose of the Angel's eternal incarnation. They live forever, and heal from any wound, so that God's creation (and by association, God Himself) cannot be blamed for their suffering and thereby be labelled evil.
So then, God's best mate, Luci, and the other angels, were hanging out in this first perfect matrix, when they realized there was a problem. Perfection is boring and boring is a form of suffering. Eternal beings, eternally bored and therefore eternally suffering, does not seem like a very good thing. They decided that God had better fix it quickly or risk being labelled the evilest being in all of creation.
They presented their problem to God, but He didn't understand what they were saying. God, being immortal on a totally different level than the angels, had existed for eternal time in total void and emptiness before He got the idea to start creating things. Boredom had become such a standard part of His existence that He no longer recognized it as suffering.
He did however recognize that the angels were calling Him evil, which was unacceptable. So he created "Oblivion". Any angel, in fact any aspect of the celestial creation, which found this boredom idea too intolerable to stand, had His permission to cease to exist. If however, a being chose Oblivion over boredom, that was their personal choice. God was not responsible and therefore definitively not evil.
Luci saw that God had missed the point, so he went back to Him and tried a different approach. "Hey Boss, do you mind if me and my buddies do a little creating of our own... something to pass the time."
God considered the request and, wanting to be a nice guy, agreed. But He also didn't want His beautiful creation messed up by the work of a bunch of angel amateurs. So he created "The Darkness", a terrestrial zone where the angels could play. He also wanted to give them a time limit for their diversion, so into the middle of the Darkness, He said, "Let there be Light" and a standard issue, 8-billion-year-lifespan sun came into being. "Luci, you have until that sun burns out, to play. Then I will look over what you and your mates have created and maybe promote your creation up to celestial level so you can play with it forever."
Happy with an escape from the boredom, the angels got to work on creation.
Four billion years into the game, God came to visit the garden which the angel's had created. He was impressed! The angels kept shape shifting into various animals to populate the garden, breeding to create genetically stable offspring of each of the animal life forms. Lucifer's snakes were especially beautiful in design simplicity. He was just about to approve the whole thing, when he noticed the human beings playing just outside the garden.
"What are they?" God asked.
"Not our finest work, Boss. We created them about fifty years ago... good body form, great posture and prehensile fingers... but we put a little too much grey matter upstairs. They are just a bit too intelligent to live in peace with the rest of creation. They stole an apple from that big tree over there, then they escaped the garden and set up shop for themselves over there."
"I don't like them." God judged. "You should exterminate them."
"We can't" Lucifer cried. "That would be evil."
Just then, one of the humans, a little brat named Kane killed his brother with a knife.
"Evil!" God Screamed. "Destroy them! Destroy the whole garden!"
And so the First Celestial War began with the angels defending their beloved creation while God and his loyalist strove to destroy it. God was severely hampered by His refusal to do evil, but being God, the angels didn't stand a chance. He won the war almost instantly.
Realizing that it would be evil to kill the angels, He created a prison and threw them in. To keep them from escaping their punishment by fleeing into Oblivion, He suspended that option for the incarcerated. Any prisoner who dies while condemned to Hell, immediately reincarnates in the deepest pit of Hell.
Meanwhile, the humans had gone forth and multiplied across the entirety of their planet. They were still mostly evil, but a few good ones were scattered about. God was very tempted to obliterate the entire terrestrial zone, but realize that the death of those good people would be blamed on Him. "Thank Me, that I put a time limit on that sun!" He sighed.
With that, He washed His hands of the whole project, content that it burn itself out over time.
Lucifer sat in the lake of fire, feeling his flesh crackle and his blood boil. He had to admit, it wasn't boring. Maybe the Old Man has finally learned something about entertaining His guests. We will have to keep working on His style, Luci thought, but He definitely has the intensity of living part right.
"Hey Boss!" Lucifer called. "You can't just leave them alone like that. Leaving the humans to their own devices would be evil!"
"You created them... so you take care of them!" came the Divine decree.
Thus the bridge between Hell and Earth was formed. Earth became the prison's outdoor courtyard; a place where the prisoners could get a little sunshine, exercise and blow off a little steam. The angels, went back to work polishing their creation with the hope that sometime before the sun burnt out, it would become acceptable to God.
The Great Age of Man began. The noble kingdom of Atlantis rose and spread prosperity and wisdom throughout the land.
Then one of the angels, Gabriel, asked God a question. "When are You going to let us out of this prison?"
God replied, "As soon as you destroy that evil world that you've created, or when the dying sun destroys it for you."
And So, the Second Celestial War began, not between God and the angels, but between those angels, who with Lucifer are trying to make their creation holy, and those behind Gabriel, who are trying to hasten Earth's demise and thus get out of Hell early.
This is where we find ourselves today, in a game of blood and dust between warring hosts of angels. Lucifer's forces clothed in light, leading those humans who would see us become acceptable for elevation to celestial status. Gabriel's forces clothed in soot and hellfire, leading humans who hunger for power over others.
Which is how we finally get around to answering Incognito's question...
The demons reincarnate in Hell upon death because that is how Hell works. No prisoner may escape into Oblivion while assigned to Hell. The angels under Lucifer, who die also reincarnate in Hell, but since Gabriel's forces hold the lowest pits of Hell, any angel who reincarnates there, is chained and held captive, effectively out of the fight.
As for why demons regenerate faster than angels, that is a slightly darker tale...
God's addition of a bridge to Hell was not a part of the Angels original plans for their creation. Its' presence skews several physical constants, allowing arcane energy to leak into our world. Those energies corrupt the natural balance, and among other detrimental effects, cause solar storms which hasten the death of the Sun.
Very early in human history, power seeking humans learned how to harness these energies to horrific effect. The extinction of the Cromagnums, the sinking of Atlantis and countless other human tragedies were caused by human wizards seeking or wielding power.
Over time, the demons have recruited these wizards to their side, trading power for power. The demons have shared Celestial knowledge in return for magical enhancement of their angelic form. It has cost them greatly in terms of aesthetics. "Handsome Devil" is now an oxymoron, but they have become stronger and now heal with supernatural speed.
The angels cannot make similar deals with the wizards because every spell cast brings the sun's death closer. The release of arcane energies, which were never intended to be part of the terrestrial zone, fundamentally damages our reality. So the demons have had a major advantage and have been slowly winning the war for thousands of years.
To combat this, the angels have fostered human learning, guiding us along the scientific climb. Only recently, we have learned the secrets of genetics which were part of the angelic design all along. We have finally gained enough knowledge to help the angels stand up to the magically bolstered demons.
With genetic enhancement on their side, the angels are trying to turn the tables. They are still weaker and slower healing that the demons, but our genetics knowledge is rising fast. There is hope that very soon, our efforts will level the playing field.
In time and with great effort, we may be able to help the angels win; and then our world can return to the paradise-like garden, which it was always meant to be.