DePerc:But could there be a situation where a person would not be allowed back into society under any circumstances?
I don't think so, but perhaps. They can accept being confined in exchange for being able to trade.
DePerc:If a mentally ill person causes harm to another person, or their property, and the DRO pays the victim for the damage done, is it moral for the DRO to seek resitution from this severely disturbed person?
I think you're confusing seeking with forcing. DROs, along with anyone else, can seek whatever they want. However, I don't think the situation you proposed would be much of a problem, as mentally ill people who are at risk to harm others wouldn't be free to walk around on others' property on their own.
I would like to point out that it's perfectly fine if you think that my particular methods for choosing a good DRO are flawed; after all, you and I can choose different sorts of DROs if they come about in our lifetime.
As you can see from my responses, there's a lot of freedom to act if all you have to avoid is NAP violations and get some (but not all) customers. I'm sure you can come up with your own ideas for some companies that would solve the problems you know about and would be able to handle unexpected problems while complying with the NAP. Anarchy isn't here yet and my lifetime is limited, so I don't spend much time thinking about DROs, but if you come up with any interesting solutions, I'm happy to look at them.