If the Fireflying Batrider dies, he loses the flying state and ability to leave fire trail. He should keep on leaving a fire trail.
The removal of the flying state is alright.
This issue applies to reincarnation with Aegis of Immortal aswell.

Reproduction Steps:
  1. Grab a Batrider with Firefly, leave him level 1
  2. Give him an Aegis of Immortal or a Bloodstone
  3. Cast Firefly
  4. Die

Current Result:

Batrider is reborn without leaving fire trail. He actually still has the Firefly buff icon, though, which is alright.

Expected Result:

Batrider should be reborn, and still should be able to leave a fire trail.
He shouldn't and isn't flying, that's alright.