I'm not sure, but I'd say they're in "hell".
In volume 3, Guts was about to go in hell because of his brand, it seems, so...
And according to the God Hands, once you're in hell, you're trapped forever, and eventually lose you identity (I don't think we know how much time it takes to lose your identity like that... maybe it's already too late for the sacrificed Hawk Soldiers? :-/ )...
As for what would happen if the Idea of Evil was to be destroyed...
Well, it said that it was born as the "ego" of the dark side of human consciousness.
So, right now, that "dark side of human consciousness" is called "hell", and "is" the Idea of Evil. The "big heart" seen in episodes 82 and 83 is nothing but the Idea of Evil's "core".
So, I guess that the question would be: "was the dark side of human consciousness "hell" even before the Idea of Evil was born as its ego?" If not, how was it different?