Yesterday I was digging around in my worm bin checking things out and discovered small yellow balls that looked like worm eggs. After doing some reading, that's sure enough what they are. Here is a photo of some of the eggs I found in my bin.
This article has some good information about red worm cocoons. My first thought was that if the worms are reproducing, they must like their conditions, but after reading this article I became aware that if certain conditions deteriorate (temperature, supply of food, moisture level) then they may reproduce faster in order to ensure the survival of generations in the future. Not having vermicomposted before, it's hard to say whether my worm population is reproducing at an average or above average rate. I'll just have to continue on and see what happens. I can always donate some worms to the park composter if I feel there's too many in my bin.