In Iago's soliloquy in Act 2 Scene 3 lines 303-328, why does Shakespeare use so many contrasts and references to hell, and what effect does this have?

In another masterful Shakespearean soliloquy (this play is full of them!), Iago advances Shakespeare's light/darkness motif and themes of good v. evil, appearance v. reality, and the Garden of Eden.

First, the light/darkness motif is most obvious in the racial differences of the characters, but Shakespeare also employs this motif to stress the notion of good and evil.  This speech takes place at night (when most of Iago's machinations take place), and Cassio is unable to see the light of truth because of Iago's dark plot. In lines 332-344, Iago declares,

"When devils will the blackest sins [advance],/ They do suggest at first with heavenly shows/ as I do now."

Later in line 351, he threatens about Desdemona,

"So will I turn her virtue into pitch"

This contrast of light versus dark is not simply Iago pitting a white character against a black character.  Iago knows that his deeds are dark and from the blackest regions of the heart.  His black deeds contrast sharply with his "fair" exterior just as he will make "pale" Desdemona seem guilty of pitch-colored acts.

Of course, normally, the good and evil are represented by light and dark, but Shakespeare's discussion of good and evil and light/dark furthers Othello's theme that all is not as it appears to be.  On the outside, Iago is the loyal friend and confidant.  Othello and Desdemona confide in him, and right before this soliloquy, Cassio has confided in Iago.  He appears to be an "honest" man. In contrast, racially motivated characters such as Brabantio and others assume that Othello is devilish, "dark," and satanic because of his exterior.  Shakespeare's proves this to be untrue by generating sympathy for Othello throughout the play. Numerous other examples exist of this theme.

Finally, Shakespeare includes the devil allusions to further his Elizabethan take on the Garden of Eden.  Iago is, of course, the serpent who uses "Eve" (Desdemona) to get to "Adam" (Othello).  In this soliloquy he not only describes his actions as devilish, but he also discusses how he will ensnare Desdemona to bring about Othello's and Cassio's downfall.  He ends the speech by promising,

"So I will turn her virtue into pitch,/ And out of her own goodness make the net/ That shall enmesh them all . . ." (2.3.351-353).