Well, she wasn't born in Hell, and I don't think her soul was sold to Zariel (otherwise that would've definitely come up), only she herself physically. Devil blood also doesn't seem to curse tieflings to be reborn in Hell (again, would've likely been mentioned)?
I think the automatic rebirth in Hells only refers to pure devils and fiends and likely those who sold their soul to one.
And for all of Karlach's habits to run from her problems, I believe she'd consider this possibility in her adamant desire to get away from Zariel and Avernus... :"D
And that's another reason why Karlach's engine isn't really a big problem in this setting. If it was her soul that was sold or tied to Zariel, it'd be a different matter, but as things stand, Karlach still has her soul as it has to be sold willingly.
Look, I've written a couple of shipped games, and there is no way that would not have been discussed during writer/narrative meetings. The only logical explanation is that something major was cut late in the development and stuff was already locked in, forcing the writers to compromise. I am quite sure they're frustrated how this all turned out, but it is, for the most part, out of their hands. I just don't know why they did not remove the dangling threads and plot points that would indicate there's a way to fix it. They added more infernal iron, which makes absolutely no sense, unless it's just set dressing.
But if this was truly what they intended from the beginning, I have no words.
