Okay, let's also assume that Incorporeal Mahito is somehow affected and harmed by Nagato's Shinra Tensei who lacks NPı, just to make you happy. Then what? It won't kill him because it doesn't harm is soul, would probably reduce him to a puddle. Mahito, seeing that display of power and understanding that he can't get close to Nagato, will go Domain GG.
Mahito is cautious and cowardly, if he ever feels threatened he'll go Domain GG. The only reason he doesn't use it very often is because he is often fighting against Yuji and he can't use it against him because of Sukuna, even then Mahito still risked using it in their final fight. Domain is a very go-to ability for Mahito.
Not all Domains are the same. Mahito's Domain allows him to affect souls of others without needing to touch them, this isn't something Nagato can block. Nagato will not have the time to break out of or harm the Domain has he will be busy having his soul distorted and destroyed by Mahito, a threatened Mahito if he ever used Domain in the first place and would obliterate Nagato's soul right away.
Blocking the hands will not matter. Mahito does not need to fully manifest his Domain and trap Nagato inside to use it. The range is active before Domain is fullt materialized.