There's No Flaw in the Plan...

That totally works mechanically.

...But Everything Else Resists the Plan

First, most folks are level 1 and stay level 1. In the Dungeon Master's Guide's chapter Campaigns under the heading Generating Towns under the subheading Total Characters of Each Class a DM is supposed to

take the remaining population after all other characters are generated and divide it up so that 91% are commoners, 5% are warriors, 3% are experts, and the remaining 1% is equally divided between aristocrats and adepts (0.5% each). All these characters are 1st level. (139)

This leaves the vast majority of the population with HD insufficient to prevent Constitution loss via most spells that bring back the dead, including the 4th-level Drd spell reincarnate [trans] (PH 270). As reduced Constitution means reduced Fortitude saving throw bonuses, most creatures who do extend their lives this way are far more susceptible to disease and other hazards, and it means, because of their correspondingly reduced hp, they face an even greater threat than do typical commoners from such vicious creatures as domesticated house cats.

Also, commoners are poor. In the Dungeon Master's Guide's chapter Campaigns under the heading Economics under the subheading Coinage it says that the

economic system in the D&D game is based on the silver piece (sp). A common laborer earns 1 sp a day. That’s just enough to allow his family to survive, assuming that this income is supplemented with food his family grows to eat, homemade clothing, and a reliance on self-sufficiency for most tasks (personal grooming, health, animal tending, and so on). (139)

Thus to gather the 1,000 gp for just the material components for one casting of the spell reincarnate takes the common laborer working 7 days a week for nearly 30 years, and for the 280 gp needed to pay a Drd7 to cast the spell reincarnate (see Table 7-8: Goods and Services under the heading Spellcasting and Services on PH 129) the common laborer must work 7 days a week for nearly another 8 years. That's assuming a Drd7 is even present in the town, which is unlikely in any town smaller than a large town (DMG 139).

Therefore a human, with his average lifespan of 91 years (PH 109) could spend over a third of that to pay to be the target of the spell reincarnate upon his death (assuming no one in such an environment nicked the gp to pay for his or her own reincarnate spell), but he'd be increasingly frail and, possibly, increasingly miserable continuing on the work-death-reincarnate treadmill. Elves, dwarves, and gnomes might be more agreeable to such a plan, but even members of those long-lived races risk the spell reincarnate bringing them back from the dead as a much shorter-lived race.

Finally, there's the inevitable marut (MM 159-60) who

confront[s] those who would try to deny the grave itself. Any who use unnatural means to extend their life span (such as a lich) could be targeted by a marut. Those who take extraordinary measures to cheat death in some other way (such as sacrificing hundreds of others to keep oneself safe from a plague) might be labeled transgressors as well. Those who use magic to reverse death (raise dead spells, for example) aren’t worthy of a marut’s attention unless they do so repeatedly or on a massive scale.

Emphasis mine. It sounds like the folks you describe would be exactly the folks that would interest maruts.

So, in a homebrew setting that uses Dungeons and Dragons 3.5 mechanics but ignores Dungeons and Dragons 3.5 demographics, economics, and canonical creatures, the plan is flawless. Reconciling the homebrew setting with traditional Dungeons and Dragons 3.5, however, requires addressing a variety of issues.

"Is there another way of granting a population eternal life?"

First, one must simply ignore calling creatures (some of whom can grant wishes) as there are far more serious long-term campaign implications to consider than just an extended lifespan when, for example, using the 6th-level Sor/Wiz spell planar binding [conj] (PH 261) to call a series of efreet. Then one can consider other means.

Master of the Secret Sound & Kissed by the Ages

So there's the prestige class master of the secret sound (Dragon #297 78-9) at level 10 gains the spell-like ability the secret sound, allowing him, once per day as a full-round action, to duplicate up to a 9th-level spell; this can be the 9th-level Sor/Wiz spell kissed by the ages [necro] (Dragon #354 54), which stops a creature's aging. A master could first use the secret sound to kiss himself and, if magnanimous and not using it for his own wish [univ] (PH 302), could thereafter use the secret sound to kiss one vassal per day, eventually affecting an entire population.

The typical master of the secret sound enters the prestige class as a Wiz9 or Sor10. Even in a randomly generated metropolis there are no wizards or sorcerers higher than level 16 (DMG 139).

Dweomerkeeper, Boon Traps, & Other Spells

The 4th-level Drd spell last breath [trans] (SpC 130) functions like the spell reincarnate except the spell last breath must be cast on the target within 1 round of the creature's death, and the material components--otherwise identical to the spell reincarnate--cost only 500 gp (so it only takes a commoner 14 years working 7 days a week to save up for the material components' cost). This has the advantage of no Constitution loss for a 1 HD creature and no level loss for higher-level creatures. It has the disadvantage of necessitating either the creature dying when a Drd7 or higher can reach the dead creature in 1 round or the creature commit carefully prearranged suicide.

The prestige class dweomerkeeper (Complete Divine Web enhancement "More Divinity" 1) at level 4 gains the special ability supernatural spell, granting him, once per day, the ability to use a standard-action spell he has prepared or knows as a supernatural ability. This could be the spell last breath.

The typical dweomerkeeper enters the prestige class as a level 5 caster, making level 9 the minimum to use this trick. While there's a 50% chance a druid being sufficient level in a town as small as large town (DMG 139) and a far higher chance as towns' sizes increase, the dweomerkeeper is Forgotten Realms-specific.

Boon Traps of Acceptable Spells

As Brian Ballsun-Stanton mentions in his answer, a community could band together and buy an automatically resetting boon trap (Du 135-6) of last breath and just suicide on it, making sure to get first the appropriate arcane mark [univ] (PH 201). According to my math, such a boon trap costs (500 x 7 caster level x 4 spell level) gp + 5(40 XP x 7 caster level x 4 spell level) gp + 100(500 gp for material components) gp + (250 + 5(20 XP) gp for the spell read magic [div] (PH 269) as a trigger) = 69,950 gp, takes 139 days to craft, requires the feat Craft Wondrous Item (PH 92-3) and getting those involved to expend the spells last breath and read magic once per day during that time (an additional cost of 38,920 gp¹ for the Drd7 but only 695 gp for the level 1 Clr, Drd, Sor, Wiz or whatever).

To simplify, I assume each commoner contributes 1,820 gp over his working lifetime of 50 52-week 7-day-long work years, and therefore a community needs less than 40 members--a thorp!--to fund such a boondoggle... assuming a Drd7's willing to provide his services free, charging only for the completed boon trap. If he's not, the community needs slightly more than 60 members... which is alarmingly reasonable for eternal life, and shows how utterly broken the rules for boon traps are.

My calculations yield that a boon trap of the 8th-level Sor/Wiz spell steal life [necro] (BV 106) costs 84,350 gp, and a boon trap of the 9th-level Sor/Wiz spell Ensul's soultheft [necro] (CSW 152-3) costs 107,450 gp; neither price includes whatever it costs to pay the caster to show up every day and make the trap, though. And while these traps dodge the suicide-then-maybe-come-back-as-a-troglodyte bullet, both require the suffering or death of other creatures--I recommend a large number of caged toads.

Largely Unacceptable Spells

Like Pro756 mentions in his answer, if the folks don't mind becoming undead (and, perhaps, being controlled by a "malign intelligence"), there are many undead who retain special qualities and class levels upon becoming undead, lose nothing from dying, and become functionally immortal. As can be seen here, these are alarmingly common, and many of the spells needed can be plugged into a creature with the template spellstitched (CAr 161-2) by a relatively low-level caster.

The metamorphosis version of the 8th-level Sor/Wiz spell binding [ench] (PH 204-5) causes a creature who fails its saving throw versus the spell (voluntarily or not) to assume

gaseous form, except for its head or face. It is held harmless in a jar or other container, which may be transparent if [the caster] so choose[s]. The creature remains aware of its surroundings and can speak, but it cannot leave the container, attack, or use any of its powers or abilities. The binding is permanent. The subject does not need to breathe, eat, or drink while metamorphosed, nor does it age. (205)

Since this version of the spell binding still requires paying the wizard 1,200 gp to cast it and expending 500 gp worth of props, 500 gp of opals, and "a vellum depiction or carved statuette of the subject to be captured" (which was in the caster's spell component pouch this whole time--who knew?), such immortality would be hard sell, taking as it would to pay for it a Com1 working 7 day a week for over 60 years and increasing by about 14 years per level above 1. But this allows for row upon row of advisory heads a la the television series Futurama, so it's definitely a thing.

A final alternative is the 9th-level pain Domain (BV 81) spell eternity of torture [necro] (BV 93-4), costing a mere 1,530 gp to get cast on oneself. This is... not a good method of living forever and also unavailable even in Dungeons and Dragons 3.5 metropolises.

1. "If spells are... prerequisites for making the item [the creator] must have prepared the spells to be cast... but need not provide any material components.... The act of working on the item triggers the prepared spells, making them unavailable for casting during each day of the item’s creation. (That is, those spell slots are expended from his currently prepared spells, just as if they had been cast.)" (DMG 288)