I see were you are coming from, and for sake of intellectual discussion of speculative fiction even up-voted. But I think there's a whole load of possibilities you've missed.
The most basic one is simply that you're attributing human values to something decidedly not human. That learning from each mistaken life is actually a desirable feature. Perhaps only the aggregate matters. Perhaps, in fact, that which is being studied is so alien to us that we can't see how they are in fact learning through the process. Perhaps the point of existence is experience itself, rather than to be able to make decisions based on that experience. Perhaps we do learn from what we don't directly remember - that glass of warm water still effects the finger we dip in ;)
Then there's the passage of time and characters. Let's pretend for the sake of being able to follow an argument that concepts of "before" and "after" can be applied at all. Perhaps all those minds which we consider horrendous are the earlier ones, and those which come after are increasingly better? Perhaps it is the complete opposite, as we all have the wrong idea as to the way around things should be!
And, of course, we should be careful when interpreting "With each new life you grow and mature and become a larger and greater intellect". After all, we are assuming it is the experiences and learnings of the life which give those results, rather than the process itself. Perhaps it is not that at all, but rather those are simply a bi-product of whatever is really going on. The foetus requires stimulation and its nascent mind simply occupying whilst it grows and matures, and the nature of that stimulation has no effect what so ever.
I must admit, though, I have a fondness for your lovecraftian horror twist interpretation ;)
Lovecraft kind of covered this in his Randolph Carter stories. Check out "The Silver Key"[1] as a prequel and "Through the Gates of the Silver Key"[2] as the payoff. It's not the typical horror he's known for, but definitely incorporates his larger cosmic themes.
I see were you are coming from, and for sake of intellectual discussion of speculative fiction even up-voted. But I think there's a whole load of possibilities you've missed.
The most basic one is simply that you're attributing human values to something decidedly not human. That learning from each mistaken life is actually a desirable feature. Perhaps only the aggregate matters. Perhaps, in fact, that which is being studied is so alien to us that we can't see how they are in fact learning through the process. Perhaps the point of existence is experience itself, rather than to be able to make decisions based on that experience. Perhaps we do learn from what we don't directly remember - that glass of warm water still effects the finger we dip in ;)
Then there's the passage of time and characters. Let's pretend for the sake of being able to follow an argument that concepts of "before" and "after" can be applied at all. Perhaps all those minds which we consider horrendous are the earlier ones, and those which come after are increasingly better? Perhaps it is the complete opposite, as we all have the wrong idea as to the way around things should be!
And, of course, we should be careful when interpreting "With each new life you grow and mature and become a larger and greater intellect". After all, we are assuming it is the experiences and learnings of the life which give those results, rather than the process itself. Perhaps it is not that at all, but rather those are simply a bi-product of whatever is really going on. The foetus requires stimulation and its nascent mind simply occupying whilst it grows and matures, and the nature of that stimulation has no effect what so ever.
I must admit, though, I have a fondness for your lovecraftian horror twist interpretation ;)