You know, there are some people who have committed vast crimes who have changed on their own will and turned against their former life to do good going forward. Perhaps they can be given a chance.
This is not one of those times. There was no real repentance. No guilt. Nothing to push them to walk a new path, other than fear of Illya.
I can get letting them go free if Illya cast magic on them. Magic that prevents them from doing bad things. Or perhaps a permanent watchdog spell that if they so much as think of something wrong, it's over.
Illya is a godlike being, with ridiculous op powers. They can either do good, or be destroyed by her with ease.
But we didn't get that.
I like to ponder sometimes what would've happened, if Darth Vader survived. Even with the emperor dead, the empire would still be a major threat. What would the Rebels do? Would they use his help, intel and knowledge to fight back the empire and finish them off? Would they seek to kill him on sight even with Luke mediating? Would they lock him up in prison or Carbonite?
I can see them using him as a asset. But I can't imagine they would just let him go free. Unless he truly proved himself, he would be on a very short leash, and they would likely only utilize him if they could modify his body(bomb in brain,etc) where one step out of line means instant death.
But I don't really see an end where he just retires peacefully on Tatooine or something. Even at minimum if something like that could happen after decades of service, he would be on house arrest with guards monitoring him.
A best case scenario, is after his usefulness is exhausted, he becomes under Luke's direct custody. Maybe could teach Luke about the Jedi or something.