I think Hades is okay with the decay. My running assumption is that at first, when he changed the Underworld to look like SB, he wanted it to be a literal carbon copy–the small town feel and charm, brimming with all the quaintness we saw in S1. But it didn’t work that way because it’s still the Underworld AND, moreover, Hades wasn’t willing to let the souls move on because they feed his power/ego. He can’t have his cake and eat it too: either he can keep the souls trapped in Underbrooke (but not have it look like the one above ground) OR he can have Underbrook look like the one above ground (but not keep any of the souls tethered to it).
I guess, in the end, we’re supposed to read that Hades is choosing his power/ego over giving Zelena a true Underbrooke.