Paul argues that God promised salvation to his fellow Israelites -- his kinsmen of the flesh. He begins by comparing two descendants of Abraham, followed by a comparison of two descendants of Jacob. In the end, he concludes that the only factor that differentiates them is God's choice. The same holds true for the salvation of Gentiles, but Paul is focused on his own kinsmen in this context.
Isaac was chosen based on a promise made before his birth. Similarly, Jacob was chosen according to a prophetic word given to Rebecca, also before his birth. In this context, the Apostle emphasizes that the salvation of any individual is always God's decision and occurs before that person has the chance to do either good or bad.
A quick review of Romans chapter 9 will reveal that Paul never mentions spirituality at all. Thus I see no evidence supporting your contention that Paul is comparing physical seed with spiritual seed. Rather, the clear comparison is between "being chosen" and "not being chosen."
Some might argue that spirituality is the criterion by which God selects individuals. However, other writings explain that spirituality is actually a consequence of being chosen; it serves as evidence of having been chosen rather than a prerequisite for being chosen.
God marks those He has chosen by circumcising their hearts. In the early chapters of Deuteronomy, Moses urges his people to circumcise their hearts, although they fail to do so (Deuteronomy 10:16). Later, after Israel has experienced both blessings and curses, God promises to bring Israel back to the land and, at that time, He will circumcise their hearts Himself (Deuteronomy 30:6).
“Moreover the Lord your God will circumcise your heart and the heart of your descendants, to love the Lord your God with all your heart and with all your soul, so that you may live.
In this passage, we see the promise of eternal life. God assured the descendants of Jacob that He would circumcise their hearts so that they might live. Logically, if God is both able and willing to circumcise the hearts of Paul's kinsmen according to the flesh, then why hasn’t He done so yet? Furthermore, why doesn’t He do this for every person on Earth? We must remember that spirituality is not the criterion for salvation; rather, it is the result of salvation. God circumcises hearts so that a person may live, and he only circumcises the hearts of those whom he has chosen.