Sadly, such a system would never work in the United States. We have far too many people already behind bars to make these types of prisons feasible. Our incarceration rate is 756 per 100,000[1] citizens, the highest in the world. Until we figure out how to put less people behind bars, our prison system will always be a huge mess.
[1]: http://blogs.wsj.com/law/2009/10/02/us-tops-in-world-prison-...