Naked souls without a body have no appearance whatsoever. They are pure energy and only assume a bodily appearance when thinking about it. However, the appearance of any given soul’s spiritual body depends entirely upon the state of the soul’s mental image of itself. In other words, the appearance of the spirit is not a constant.
The body of an earthbound spirit trapped on the transitional plane is a spiritual duplicate of the image that that person had of him/herself in their own mind at the time of his/her death. A spirit on the transitional plain can maintain this image more or less indefinitely due to the distortion of time it experiences there. Nothing changes on the transitional plane, and this applies to a spirit’s appearance as well.
Once the soul has made the transition into the mainstream spiritual structure, its appearance will change, sometimes radically. When they have come to rest in their proper spiritual home, their appearance is dependent on the state of their spiritual evolution. The spirit will have the same basic appearance their bodies had when they died, but with “modifications”. More highly evolved spirits may look younger, healthier and more attractive than they were when they were last alive. As they progress into higher realms, they take on a more ephemeral and glowing appearance, and finally, little or no appearance at all. Less evolved spirits will look darker, more wrinkled, uglier, shriveled and sometimes crippled. The degree of their infirmities will be dependant on the degree of the evil that consumed them when they were alive. This is especially true of their faces which can take on demonic appearances on the lower planes.
Thus, any spirit can read the mental state of any other spirit just by looking at it. Spirits on any given level carry the same general degree of positivity or negativity in their appearance as all the other spirits they are likely to meet on their level. Thus, they accept each other’s appearance as “normal”. However, as a spirit evolves and loses some of its negativity, its appearance gets noticeably better. Its neighbors may take notice of the changes and thus they all know when that spirit is about to move onto a higher and more comfortable plane. Everyone in Heaven and even in Hell knows which direction their fellow spirits are headed, and this can act as an incentive for everyone else to strive for something better.