I've always held to the position that balefire did not permanently destroy a thread, it just killed them in the past. Because if it were the former, then humanity would be in perpetual decrease - if there are no new souls to be introduced into the system, but souls can be taken out, then there is an inevitable and continuous loss. And since time is circular, meaning an infinite amount of time elapsed since the beginning, then there has been an infinite loss of souls, for no gain of souls and a finite number of souls. It's simply impossible.

However, the wording employed in that chapter definitely indicates that this is the case. Aside from the redundant 'dead forever' employed, Nynaeve says "Rand, you used balefire! They were burned out of existence!" The fact that she emphasises the use of balefire means that it is different, with this tone, worse, then simply being dead.

Hence the impossibility, and the problem. Which is why I created this thread in the first place.