No, it's fine if it works. 5000gp is still too expensive for everyone to afford. There is a problem with definitions, though: Raise Dead doesn't say what happens to Negative levels you had at time of death. It says it repairs lethal damage, but does not remove curses.
Now negative levels are neither, so I'm going to do is the following:
Raise Dead removes enough negative levels to bring a character to 1 remaining non-negative level. If 24 hours passed since gaining any negative levels (even those a character did not die from) the character must immediately make his saves for his remaining negative levels. By readying an action and casting a sufficient Restoration spell immediately upon completion of Raise Dead the negative levels can be removed before the saves must be made.
If 24hours haven't passed the negative levels remain. Then Raise Dead removes one level from the total of Levels+Negative levels, taking a negative level first, (i.e. draining it).
If only one level remains the character loses two points of Con, as usually.
Reincarnate works differently: The new body has none of the afflictions of the old body, so no negative levels remain.
This arguably makes Reincarnate the better spell. Most races are not inferior to human if gained by reincarnation, because you don't get pesky penalties to mental stats, you arguably keep your bonus feats, and you can gain powerful races without RHD or LA. Of course you could roll for Kobold and get all the bad and none of the good, but hey, no risk, no fun, right?
Does anyone disagree with this? Raise dead comes out as a bit of poor spell like this.
