Sounds like a very cool and impressive ability, but in fact, it is not.
Naraku's true transformation happened when the Four Souls Jade reappeared. The main storyline took about a year to complete, and what about the fifty years before that? Was he on vacation... If the Four Souls Jade hadn't reappeared, Naraku's abilities might seem flashy, but they are essentially useless, and that's all he'll ever be.
Now, a full third of the shards of the Four Souls Jade are here, and it's unlikely that Naraku will be able to collect the rest. As long as Kikyo is a bit capable... No, not even requiring Kikyo to be capable, just as long as the protagonist group works hard to collect more shards, Naraku won't be able to get many, and he still won't be able to develop.
In the original world line, it was an arms race. A key point was when Inuyasha mastered the Wind Injury, gaining a temporary suppression and phased victory against Naraku.
