The question was raised above about why they would reuse Magpie if the character was going to be changed completely. I think the answer is that the gimmick is one thing, the character another. A supervillain may have a gimmick that has potential, but not have a very good personal motivation supporting it. Let's look at, say, Mr. Freeze. Originally, there was nothing to the character (who was originally Mr. Zero until the '66 TV series renamed him) except his defining gimmick: he was a rogue scientist whose experimental ice gun backfired and transformed him so that he could only survive in subzero temperatures. It's a neat gimmick, but there's not much more to it. Batman
'66 gave him a Joker-like backstory in his first appearance: He was originally named Dr. Schivell, and Batman himself had inadvertently caused the accident that trapped Freeze in that form, making him crave revenge. But that was ignored after that, and for decades there was just the gimmick.
But then Paul Dini came along, and he looked at that existing supervillain gimmick, and asked how it could be made deeper and more meaningful, more character-driven. So he took the idea of a character who was freezing cold, and made it symbolic of emotional coldness: Here's a character who had the love of his life stolen from him by an act of cold, ruthless cruelty, and so his physical transformation merely symbolizes his emotional transformation, his own capacity for warmth being deadened as he shut down emotionally in response to the loss and acted out of cold vengeance, with no empathy toward a world that had shown no empathy to him. The gimmick is the same, but it's the addition of the stronger character underpinning, the transformation of the gimmick into a symbol of something emotionally meaningful rather than just a pure gimmick, that makes the character better.
What's been done here with Magpie is similar. Magpie was basically just a gimmick: Magpies are known for stealing shiny objects, so here's Magpie, a kleptomaniac with a thing for jewels. And that was about it. But Mitch Watson, like Dini before him, looked at the gimmick and said, "How can I make a better character with this same gimmick?" (Or I'm hypothesizing that he did, for the sake of illustration.) So he took the idea of a character obsessed with acquiring things and found the emotion in it: she's obsessed with acquiring her own lost identity and memories. Just as Freeze's coldness symbolizes his deadened emotions, so Magpie's hunger to possess symbolizes her desperation to fill the emptiness within her. Her inability to feel pain may also symbolize that loss; after all, as the Buddha taught, pain comes from attachment, and she has no memory of the people or things she was attached to.
So it's not about using an old character vs. creating a new one. It's about looking in the source material for ideas that can inspire new creativity. Writers don't pull ideas out of thin air; we look for input that triggers associations and gives us something to build on. There needs to be a starting point, a source of inspiration. A weak, gimmicky character from an old comic book can be such a starting point, if you take the gimmick and find something meaningful in it that you can build a character around.