While I agree this person seems... misguided, I do see a point in this.
Currently we "rehabilitate" people by putting them in a cage with a whole bunch of other sociopaths for decades and expect them to emerge as productive members of society. In doing so, we already are cruel by removing a substantial part of their lives from them (and probably get them raped, psychologically and physically abused, etc). They can never get that time back, no matter how productive they emerge, no matter how sorry they are, no matter that they'll never do it again, or that they've already been punished by being completely removed from normal society for an extended period of time. That life "time" is gone forever.
I'd actually be behind a concept similar to this GIVEN that the drugs don't put them in a state of agony, paranoia, hallucination, etc. (you know, stuff normally associated with the drugs she's talking about). Or in the case of a virtual world: If the person could live in some kind of prison-like world, still study, interact with others (hopefully non-sociopaths), etc....
Basically serve out their sentence without losing that much of their actual life. Then maybe this is a more humane thing to do. It certainly helps in the case where someone receives "8 life sentences", to make that sentence more severe than just one. My only concern: Could you really rehabilitate someone who has done something so bad as to receive a punishment that harsh? A THOUSAND years?! Isn't part of the point to remove lost causes like that from society? What you're essentially doing in that case is shortening the time-frame that we are all safe from these people.