It's a really neat idea. GameSpot did something similar a long time ago, but I don't think the game ever came out and the show just kinda ended if I remember.
When you beat the game you start new game + with your current level, all your souls and pretty much all your items. You don't get to keep things like keys or other quest related items. The game also gets harder for each new game you start on that character, so if you want to play again on the same difficulty, you'll have to make a new character.
And you have to keep talking to Blacksmith Ed until he has nothing new to say and then you can give him the Red Hot soul. I think you also need to kill the spider boss before he'll take it, if you haven't done that yet.
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