The problem is that the only way your proposal could get implemented is if a politician campaigns on being more humane without increasing crime, which means he'll have an incentive to show the system works by execrating the rehabilitation statistics.

What are you expecting will happen on the police side if this change occurred?

Not much, simply they avoid patrolling ghettos (as tends to happen unless there is a "tough on crime" mayor in office) and thus the correctional institutions can declare people "reformed" who aren't.

I was mostly basing that on the difference between US prison recidivism vs. Scandinavian countries.

Failure to control for population. I don't have the statistics in front of me, but the recidivism rate among people in the US with Scandinavian ancestry is probably similar to the Scandinavian one.