As for the second point, I would argue such a situation already exists in the private space. If Walmart is the only employer in your area, and you can't live on SS/Disability/Pension alone, you've got a similar situation -- work for a low wage or go hungry ad infinitum.

A public works program with a mandate to improve both the worker and the public good presents a more attractive alternative to a private corporation with little care for the individual worker.

Prisons, at least the one's I've visited, have no such mandate to improve prisoners, thus the forced labor.

What's the issue? You'd work, save money for awhile, then enroll in some school after a few years.

Your forced labor argument makes little sense to me. Particularly this argument: "which they don't have any realistic way to opt out of." Why not? You still have free time with a basic-employment job. Learn a skill in your free-time, and then get a job in that skill.

The real world doesn't work like this - most jobs above entry level require a college degree or some kind of professional certification. If you have kids to feed and rent to pay, that's a hard row to hoe. I know it's possible to somehow get a job based on self-reported self-training but that's rare. If it was that easy why do you suppose there are so many people that are working as dishwashers and cashiers? Maybe you just think they're lazy and stupid?