The Init.bnk can be reloaded without terminating and re-initializing the Sound Engine instance if you first unload the other banks. For example, the Wwise Unreal integration successfully does it.
Prior to loading a new Init.bnk, a full clear of all SoundBanks loaded prior is required (using AK::SoundEngine::ClearBanks() is correct), but you also need to make sure all sounds have been stopped, including dynamic voice systems. You will probably need to wait until all effect tails are done playing too: adding a sleep can help with that, otherwise tracking events with the EndOfEvent callback is required to make sure everything is ready to be reloaded. Note that processing will need at least one frame to process the stop requests.
Finally, game objects that were registered need to be unregistered and re-registered after.
If you think you have found a bug, you can report it through the Bug Report (
https://www.audiokinetic.com/library/edge/?source=InstallGuide&id=reporting_bugs).