That... sort of makes sense except that the loop seems overly complex and Harry would try to prevent more misery or something?

I don't know what "just complex enough" would look like, so I'm not sure what you mean by overly complex. But I promise I will listen.

It has been established that the past cannot be changed because the universe steps through time once, with all time travel included. Harry cannot change the misery that occurred.

On the other hand, the author has said something to the effect that even if there is an afterlife in HP&tMoR, there is no evidence of one so someone like Harry would not believe in one. Without evidence of an afterlife, Harry can create one that has always existed and contains the minds of many or all people.