That's your reasoning. You're not a LG priest of a god of mercy and compassion.
You cant tell me that a [merciful, kind, compassionate, altruistic] and [honourable, law abiding] priest of [a God of mercy and compassion] agrees to kill the criminal with the above reasoning.
The villagers on the other hand (mainly N with a few E, a few G, a few C and a few L) would certainly use your reasoning (mostly) and many (all the ones that lack a 'G' in their alignment) would want the man put to death.
The Evil villagers (and many neutral ones) would want the man lynched there and then.
The Lawful Neutral villagers would want the full force of the law brought to bear, after a fair trial. The LE ones would want the man executed in a particularly gruesome way, as an example to the others, after a kangaroo court. The LG ones, would be in agreement with the Priest that the mans life should be spared (but he should still suffer the force of the law).
Put him in chains, and get him to build one. In the meantime he can be locked up in a room somwhere.
Illmater isnt exactly opposed to a bit of hard work.
Actually I think I did just tell you that they would execute the person in my campaign because there is no other reasonable option. The execution should be swift and as painless as possible, but I make the assumption in my campaign that long term imprisonment is rarely, if ever, an option
Feel free to run it differently in your campaign.