In cases like these, I think they're allowed at least ONE cheat to bring Karallen back, before giving up their powers. But I understand the reasoning - they've just seen how fucked things can get when a fallible mortal tries to play God, and they don't want to even risk repeating those mistakes.
Great little story though, thank you for bringing it to us!
I think that they ended up using their one cheat to bring back Earth, which is frankly kind of selfless, to bring back all those harmed just to get Daniel to procreate with Karallen, she was also a victim of the 4th dimensional man, but given how personal it would have been it might have led them down the wrong path.
It still feels so sad that she died, but at least their children live on, under the care of a loving father.
I was really wondering how this story won a Nebula award, but it ended up being more than just having sex with aliens and it was a really interesting sci-fi story.