Life of a Wizard states that humans are the most genetically compatible species, although the parameters of this have not been established. It might be possible to cross-breed but only under a restricted set of circumstances - likely requiring a human mother since for some reason I highly doubt demons have the physiology to support an unborn offspring inside themselves or only those who possess the necessary human features.
The fact that humans are compatible with dwarves, elves, orcs, gnomes, halflings, etc indicates a common human ancestor whose decedents diverged into different species as per some form of evolution.
LH3 revealed there are two sub-species of demons - the formerly human Somreth and the original demons (whose origins are unknown?) Maybe the Somreth demons could still retain some genetic material compatible with humans but then again....
Being a demon means losing your humanity, and the ability to produce a child is a vital aspect of humanity, one which perhaps the Somreth demons have lost in a form of equivalent exchange.
Also what could be the true fullest potential of Soulburning? A master could obtain immortality by siphoning the life force of others, but it could theoretically work in reverse, they could siphon that life-force (or their own) into someone else and heal them.
A soul is presumably a very powerful source of power - presumably created by the Lucidverse gods themselves, they are of divine attribute and can be harnessed to amplify even the most rudimentary spell into something both beautiful and terrifying to behold.