There's a reason we specifically don't let the relatives of victims make choices here. This "you would never accept this policy if it were your child" argument is really irritating. No, I wouldn't, and that has no bearing whatsoever on the merits of the policy.

I agree that it would probably be fairly tough to institute in a democratic country. But I think it could be doable in a reasonably (but realistically!) rational country. The long-term effect should be a vast reduction in the quantity of kidnappings, since you render them ineffectual.

Such policies are already implemented sporadically. Look at various navies' responses to Somali pirates and their hostage-taking, or the way the US negotiates (or, rather, doesn't) with the occasional terrorist who kidnaps a US citizen and threatens to behead them.