When Greed punches Father in the face, it's through the eye. Unlike the stoic and grumpy facade he shows humans, Father gives his signature one eyed smile from when he was the Dwarf in the Flask.
Obviously Father blew his major chance to win by expanding so many souls for an explosion and poorly created humans.
The reason Father uses alchemy to avoid damage is to avoid having his body opened; allowing God to escape.
It's worth noting Father still had the souls of King Xerxes and Hoemheim's Master within himself despite spreading out his Philosopher' stone around Central at least and giving some to create his children. Meaning he secluded the two souls he knew could physiologically hurt Hoenheim from the rest when he split off Philosopher stones.