So I've found a bunch of these souls, I've leveled them up to free them but I haven't done so yet. I've read that you should do it either before or after chapter 4. Is this true? When is the best time to release the souls?

before chapter 4 ive released a couple of einherjars but if youre attentive enough youll find enough new ones to train and keep with you yet if you choose this tactic youll need to train a bit more or youll end up like me with one strong character and a lot of weaklings but i dont think there's a perfect time for releasing them good luck;)

if you want to perform perfect releases (releasing an einherjar with the strongest armor, weapon, etc. possible) then you want to wait until the seraphic gate. the point to this is to create "god" characters that can direct assault seraphic gate bosses.

but if this doesn't interest you, then you can release them whenever you feel like it. just keep in mind the more powerful the equipment they have when released the more you will reap.

i'm agree with Saevus, i've done it too..plus the Angel slayer 10000atk 10000MAG,your attack just gone crazy...