You only need to work once, when you got the egg, simply kill it and smelt it again to get more loot.
Kinda OP in my opinion.

The idea sounds pretty interesting, it's like you're resurrecting a mob from its ashes or something.

Definitely useful, specially in maps like Skyblock where every single small thing can always help. For example, when you just start your island and make a solid bit of terrain, killing a single zombie or skeleton would allow you to get spawn eggs using the Incubator, and killing those zombies or skeletons could in turn create a chain that would slowly allow you to get bones and arrows.

I like the idea dude, I'll definitely give it a shot :)!

EDIT: I tested it a little bit and it seems to be working correctly on the latest snapshot (19w11b).

Perfect datapack for mincrafters who wants spawn egg.... Every thing is fair like you need to do hardwork for getting special eggs