Yes I am. In my view people with NPD probably should be isolated from society in the same way an irredeemable criminal should be; that is because narcissists will never stop harming people if left to their own devices. If it's possible to do this without causing too much harm to society or our concept of justice, then it should be done.
Thing is we already do this. The only step that would be novel would be allowing new inputs into the system.
We already institutionalize millions of people with mental disorders. When there's no focus on mental disorders and treatment that's where prisons come in, when there is a focus on mental disorder and treatment then mental hospitals come into the picture.
The sorting already happens. The differences would be in where do we begin intake, and where do we place people.