Board Thread:Questions and Answers/@comment-8179522-20130414054311/@comment-5398287-20130414060252

Okay, first off, Hollows need to have sexual organs to reproduce with other beings, and the only ones who even have organs RESEMBLING those of Humans are Arrancar, so that's who we're gonna be talking about. Now, putting aside whatever farfetched reason for how or why an Arrancar would even bother to stop its daily routine of killing and consuming others to bump uglies with something else with sexual organs (the only thing close to an Elemental I can think of in the Bleach universe is the SK since we don't know what the hell it is, so let's go with that). Now let's go over each part of your question beyond that.
 * It would have a soul. All beings have a soul because they are made from a soul. That's how it works. No exceptions (shut up Senna).
 * As for abilities from the parent, most likely. It appears that types of powers are inherited from a being's parents, in this case a Hollow and the freaking SK, which would probably end up in the universe being destroyed. But let's put that aside for now. I'm not entirely sure what you mean by Hollow powers, as Hollows tend to have varying powers unique to themselves, but since we're talking about an Arrancar here, I assume you mean the ability to use Cero and Bala, open a Garganta, use Sonido, seal their power in a Zanpakuto, have Hierro, and use a Resurreccion. So yes, they'd be able to do that.
 * As for whether the Zanpakuto would be unique, remember that it essentially contains the powers and abilities of their original form, which means it would be at least somewhat different because the Hollow/Arrancar/whatever didn't asexually reproduce.
 * Finally, the level. Going off my knowledge of Hollows, I believe they all start at a below-Gillian level when formed and work their way up from there. I can't think of any reason for this not to apply to the child unless it is the son/daughter/it of the SK himself, in which case we have other things to worry about.

So yeah, that's my answer. Hope it helps.