I think you dismiss the deterrent effect of punishment too hastily. I actually think that should be the primary purpose of prison (apart from forcing criminals to work to compensate their victims, but that one's probably too radical).

Rehabilitation should obviously be another goal, but for violent crimes I don't think there's a good way to predict recidivism that couldn't be gamed. If someone could theoretically be rehabilitated in a year for mass murder, should they be released? I don't think so, because that would drastically reduce the deterrence against murder.