The Soul Hunter episode set up a lot about Minbari and their beliefs about souls and Sinclair's specialness, which is why I am such a fan of it. On rewatch, there is a lot going on there, but without that context, I totally can understand why it might be a lesser episode on first viewing.
B4 is pretty cool and they pay off everything from Babylon Squared so so well.
Yeah, I love Sheridan, he is my favourite sci-fi hero of all time. Whenever people ask me "which Captain? (in the Star Trek context), I just troll them and say Sheridan.

Yeah, he is definitely more human and jovial at times than Sinclair, who is more brooding and almost kinda zen. However, Sheridan can also be pretty pragmatic and almost ruthless when necessary. The character gets really interesting and complicated when the central conflicts put him into difficult military situations without easy answers. JMS does a great job showing off his military and strategic talents, which was quite different from previous sci-fi captains like Kirk or Picard and which really sets the stage for characters like Adama.
Although the whole O'Hare situation was extremely tragic, I think it was one of those art through adversity situations where I think the show benefits from JMS dividing up his original hero character into two separate characters with different arcs and roles in the story.
Sinclair is a great character and is the entry into the B5 universe and its mysteries, but Sheridan is irreplaceable for me as the human hero who leads B5 through its central conflicts. There is a reason why Mass Effect's Commander Shepard (at least the paragon version) is basically a gigantic Captain Sheridan rip-off. Yeah, I love his relationship with Ivanova, who is such a great character. JMS giving her his own Russian background and the cultural attitudes and such that come with it make her so interesting.
With respect to why Sheridan was chosen to replace Sinclair, you have great instincts and are only a few episodes away from some answers.
