I agree that there is some portion of the prison population that could be turned or rehabilitated. Part of an answer to the question here is, I think, what percentage of the dollars saved by reducing prison population would end up being funneled into rehab/counseling/monitoring/etc...? Would states pick up the bill for those prisoners released from federal prisons?
This would also lead into a discussion of inherent vs learned (eg environment) behaviors. I would wager that what I could consider the real prison population (not the one up people) is a mix of both.