First off, Arnold is a RINO (Republican In Name Only) and definitely is not conservative. He is also naieve, ignorant and very ineffective as a politician.
An even better idea for dealing with illegal immigrants who are prisoners is to ship all of them back to their host country and pay certain countries (like Mexico) the 10 cents on the dollar that it would cost Mexico to house the prisoner for the rest of their sentence. Mexico and other countries would have a renewable source of income, we would save money and, most importantly, we would be getting rid of criminals who would never be allowed to legally emigrate here anyway.
There are some sentencing issues to deal with but those are easily handled and would still save us money. For instance, Mexico does not have a death penalty or life in prison sentence and would never extradite any person to the U.S. who is facing either of those sentences. Usually the maximum Mexican sentence is 40 years although they will rarely issue a 60-year sentence. This is something we could easily resolve to our financial benefit and that of Mexico's while conforming within their guidelines and laws. Ship prisoners to Mexico with a maximum 20-year sentence which is actually worse than a life sentence in the U.S. Even 1 year inMexican prison is arguably worse than 5-10 years in a U.S. prison.
With a 20-year prison sentence cap for deporting prisoners, we would save ourselves literally millions of $$ by not having to pay for high profile, lengthy and extremely expensive death and life sentence prosecutions. We would then save $$millions more by paying Mexico a fraction of what U.S. prison costs are and the best part of all would be Mexico would be responsible and have to deal with their own criminals.
I realize a few purists would complain about the outsourcing of some jobs but sometimes it can really be a good thing.

[8D]