He was technically reborn. And he did pay a penance. He didn't even move when Chikage attacked with her spear, and that would have ended him.
But also, it was Oriobana's will. So I think that they are definitely doing it more for her than anything else.
I'm not even sure what's happening anymore. Did Koyou become the King of Hearts? Did he master the spirit gun? Did he hack into the player system for Miyuki?
Based on what Risa said, Koyou should just have sex with her right? That's what I got from the last few chapters.
At any rate, seems like another training arc is incoming. This time, chi focused.