Most of what you're saying is that we should select prisoners better and avoid creating more criminals as a society. The principle I agree. However this part is completely non-sequitur, as the point of contention is whether there's something better than prison to deal with after-the-fact criminals. The only alternative you give is a very soft form of restricting movement, which is devoid of reality for many forms of crime from petty theft and embezzlement to rape and murder.