In Dopplegangland, Buffy assures Willow that your vampire self is nothing like your living self. Angel says “Actually…” and then off Buffy’s look, wisely backs down from that. In The Wish, Xander and Willow became the Master’s most devoted minions because of their innate loyalty. Before Angelus was turned, he was a “worthless” layabout who wanted to indulge in his own desires–drinking and bar wenches. When he became a vampire, he lost whatever social restrictions he had and indulged himself in in drinking bar wenches, pain, and punishing his father over and over and over (as pointed out in Somnambulist). Harmony was a vapid follower in high school, and she remained just as vapid as a vampire–even her love for unicorns remained intact. And in S2 of AtS, when we see her in LA, she’s the same follower she ever was.
In other words, canon gave us multiple examples that despite what Giles believed, vampires do maintain certain elements of their personalities. It might vary from vampire to vampire, but becoming a demon doesn’t wipe away all aspects of humanity. Hell, the Master even chose to turn Darla because of her potential–a woman smart enough to make a life for herself in the colonies, even if that meant being a whore.
And where do we get the information that when a demon moves in, all humanity is lost? The Council of Watchers. They knew they were wrong about that or else they wouldn’t have chosen the vampire they did in the S3 episode when Buffy turned 18. They specifically chose a former psychopath with mother-issues.
Not really, no. A lot of stuff from S1 was either ignored or abandoned later. Spike showed up at the beginning of S2, which was their first full season. He’s as important to setting canon as the 13 episodes before his arrival.
But he was still his therapist self. He said he felt connected to all the evil in the world, and that he had a major bloodlust, but he wasn’t a mindless killing machine. Spike is like that, except he had about 120 years to work through all that before he came to Sunnydale.
The soul was nothing more than a plot device they needed to explain Angel and the star-crossed love. It worked for its purposes, but the writers spent a whole bunch of time after that trying to deal with the implications, with what it was, with who needed one, and with who had one. Joss said that a soul is more like a guiding star–it pointed towards the right choice. In Angel’s case, a soul is cage that kept Angelus from breaking free. In Spike’s case, a soul was the end game. At one point, in Willow’s case, a soul didn’t matter at all, and she did horrible things even though she had one.
Creating a world with nuances and shades of gray doesn’t mean that the writers fucked up their own canon. I think when it came to characterization, they did an excellent job of keeping the characters stable and responding in expected, coherent ways.