Very funny episode.
I get the idea that it is unfair to punish someone forever without a chance of redemption but should there be any limit on how many times a bad person can "retake the test"? At what point does the system basically say "ok, we gave you like a million chances at redemption and you have not made any improvement so you go to the bad place now."? Or is a bad person who does not want to change, basically stuck in the fake good place, forever doomed to "take a test" that they are never going to pass?
The show takes a rather light and tame view of "bad people". Sure, our main characters have flaws. They can tell lies, or be selfish or self-absorbed. The worst was probably Brent who was an outright narcissist and misogynist. But that's about the worst of it. In fact, it presents all humans this way, that our environment and circumstances make us jerks but deep down, people are not all that bad. Certainly, in this context, I think the new system works very well. If people are basically good but do little bad things because of circumstances, then it makes sense to give them chances to improve and be redeem rather than toss them in the Bad Place forever and ever. But I don't think the system is designed to really address the problem of real evil, like child rapists, serial killers, genocidal dictators or just plain psychopaths who are born that way.