Some would say there is little difference between the two institutions. To that I would say, it all depends on where you are "residing". I have worked briefly (physician) with correctional institutions and have been to several psychiatric institutions, all on a professional basis, and the variability in severity of the situation is marked. Regardless, I agree with your sentiment that a dangerous person is a dangerous person.
The question is, what is best for him with regard to any hope for recuperation (IF he is mentally ill), and how can we insure public safety from him as a potential threat? I don't know the young man or his situation, nor can I speak to the veracity of a mental illness defense on its own merits, but it is a valid question. The treatment of the mentally ill often reflects the values and evolution of a society. And there is a lot more to the notion of an ongoing mental health illness versus the temporary insanity plea. While the latter might be understandable given circumstances (blind rage, revenge, etc.), it is by definition, without precedent for that individual. Whereas a person with true mental health issues will generally have some sort of track record. Whether there are violence issues or not can be a predictor for future transgressions, but it is not necessary.
Finally, given the nebulous nature of concussions (see my post in the Eric Dungey thread), it is a very savvy legal maneuver as it introduces an easy avenue for "reasonable doubt". You can be prejudicial on the idea or his motives behind a mental illness defense, but all it takes is one juror to say, "You know, maybe there is a connection...", and you have won.
Now, treating mental health disorders, and especially mandating their treatment, is a topic not appropriate in this thread (but it is quite a topic). Regardless, I would feel safer knowing this young man is not walking the streets.