For the victim, that probably still looks like a slap on the wrist. But in terms of rehabilitation, yeah, something like that would be better if our goal is rehabilitation (and not punishment), which I think it should be (as in, the goal should be to reduce violent crime long term, not to have harsh punishment to make victims feel better while causing the crime rate to increase long term). I hesitate to suggest things because this is the kind of case where the obvious answers are often wrong for long term societal improvements.

I would say that if you did day release, the "night" part should not involve spending time with career criminals. And most likely that time should be structured (e.g. an hour of homework, then an hour for dinner, then an hour for a victim support group, then an hour of TV, then lights out time) rather than unstructured (casually hanging out with other people on a bad path), because I think you really want to be working in small groups and directing the conversation. I think it should look and run more like a home environment than a prison, because these kids probably haven't had a nice, structured, home environment.

However, like I said, there will be experts that will have a better idea of what data backed interventions have worked in comparable countries.