The only upside to it is that because of it, an idea for a much better Kung Fu Panda 4 violated all my boundaries and got into my head on its own. It has much better character development, a much better plot, and a much much MUCH better antagonist.
I struggled to think of a title. Initially, I was going to write "Is being OP actually overrated," (note that this is a joke; I adore Dreamworks, but it's the only text I could think of. This is just for a meme 😭)
Don't take this post too seriously. It's just my "what if" fantasy (in this post, the fourth part is not taken into account).
I think that the spirit world is much bigger than we were shown in the third part. I believe that absolutely all souls get there, not just kung fu masters. Because Kai got into the spirit world before Ugway invented kung fu.
So, I think that the spirit world is divided into several levels.
The first level is "up": This is the location where Po meets Ugway at the end of the third film. Only those souls who have been able to find inner peace get there.
The second level is the "middle": This is the location where Po defeated Kai. Only thouse souls who could not find inner peace, but who were good people during their lifetime.
The third level is "purgatory": Tai Lung gets here at the end of the first film. Those who managed to make mistakes during their lifetime go there, but these mistakes are not so terrible as to send the soul to the lowest level.
Fourth level "Hell": The souls of sinners who committed terrible deeds during their lifetime come here. I think that's where Shen is now.
Souls can move from the upper to the lower levels whenever they want. For example, souls from the middle level can descend into purgatory and even lower. But the soul cannot just rise to a higher level. To do this, the soul needs to be "cleansed". So, for example, a soul from purgatory will be able to rise to the middle and then to the upper level. But it is also possible to rise to a higher level if you absorb enough chi. That's exactly what Kai did, when he collected enough chi from purgatory, it allowed him to get to the middle level. After that, he was able to collect chi masters from two levels at once. However, his fight with Tai Lung took too long, as the leopard turned out to be a serious opponent, which is why Kai was able to get to Ugway only at the beginning of the third film.
By the way, Kai did not fight with Shen because he was afraid to go down to the lowest level straight to hell. This explains why Kai doesn't have a peacock pendant, but he does have a leopard pendant.
Once again, this is just a theory and concept of how I see the spiritual world in the KFP universe. Don't take it too seriously.
(Has anyone been able to make out Shen's silhouette on the lower level?)