The criterion of "blood on his hands" is neither useful nor real for the reasons that Eldar describes. The people we call terrorists are also freedom fighters, and when peace is signed they will be released and become national heroes, as happened to Begin and Shamir who even became Prime Ministers. 1. The first reasonable criterion is "likelihood to offend again". Release those not likely to return to terrorism. Example: the old, the sick, etc. Likelihood can be determined by statistics. Above a certain age people are unlikely to become militants. 2. Those who sat for a long period of time. Example: Kuntar is sitting for nearly 30 years already. Some countries accept this as "life sentence". Consider that the man paid already. 3. Prisoners whose release will bring benefit to Israel. Example: Marwan Barghouti. He is a relative moderate who pushed for the Prisoners' Document. He can also replace Abbas if hit by a bullet. Other signers of the Document are also relative moderates. They will apply a moderating influence on their colleagues.
Jerusalem stabbing: One cop seriously wounded, two others suffer moderate wounds (Haaretz)
from the article: Reconciliation begins in prison