In context, spirit is clearly referring to a being - that is, a Spirit. A living thing, not an element. Don't take this the wrong way, but it seems like you're projecting a meaning that obviously was not intended.
And no, Earth is not Hell. Earth is just Earth. We live on an amazing, beautiful, but fallen, world. There is great imperfection and violence, but it is NOTHING compared to Hell. Likewise there is tremendous wonder and beauty, but that is NOTHING compared to the New Earth.
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