"what separates a normal person from an abnormal person?"
I don't think there are "abnormal persons", everyone is different, to an extent, and everyone is the same, to an extent. Most people who are incarcerated were fairly "normal" people (= like you and me), before one or a few events transpired that made society cast them out and put them in jail.
We already know that factors like social and economic status, level of education and previous abusive relationships play a role in who commits crimes. If we had a machine that could change someone to remove what society deems as "undesirable", and if we should use it, is a much more philosophical question than it is a practical one. I'm torn on it, and can't give you a straight answer, because while being totally fine with killing people is clearly not a trait that we want a free man to have, is it okay to change someone's foundational mindset - i.e. making him someone else - just because others want to? We already condemn cults that have done the same thing through brainwashing, is there really any difference?
As for your hypothetical, then yes, I would release him after a year. I thoroughly believe that a justice system built on retribution is one of societies deepest pitfalls. However, for repeat offenders that have clearly circumvented the tests and safeguards that exists to determine if someone is rehabilitated, the amount of rehabilitation needed should be much more rigorous. I don't believe in fixed year sentences at all when it comes to this. "Let them out when they're ready" seems like a better deal to me.
I get where you are coming from with the car accident, and I kind of agree with the fact that they should probably only be banned from driving. There's a reason it's called a car "accident". However, when you get your driver's license and get a car, you accept responsibility of the vehicle and the damage it may do. Likewise, you accept and agree to the rules of the road (following street signs, for example), and if you break them, you are clearly not "rehabilitated", for lack of a better term. If you do follow them and still run someone over, it is probably because the other person was not following those rules. I'm sure there's also many other factors to acknowledge and put into the scales of justice that I haven't thought of, but at the end of the day, I don't believe people should be punished, they should be made into something better instead.