It is very curious, and ineffective, that the police have focused on dispersal rather than corralling the rioters and arresting them en masse. The police certainly have enough manpower to do that. I would have to chalk it up to more cowardice and indecision in the HK government leadership.
The next question would be where to hold them, the rumor of an island prison is actually a sensible albeit expensive idea as there will then be a need to supply, patrol, and protect it. Perhaps a relatively isolated corner of HK island or the New Territories would work. But the arrests need to happen first.
There should also be plenty of intelligence at this point to also arrest the conspirators behind the rioters, perhaps this should even take priority over arresting the rioters. A state of emergency should take care of the lax judiciary at least temporarily, but again it goes back to political will.
The current Commissioner of Police Stephen Lo would be retired in November. Therefore, Stephen Lo isn't going to stick his neck out now. That is a problem for bureaucrats as they tend to play it safe. There are many times in the early days of the riots that he didn't make a stand and ask the police to retreat. It looks pretty bad and weak and might have contributed and encouraged the riots in some way. There is a reason why they asked Lau to come back from retirement but some of the tactics Lau used were a little too controversial and risky for some people in the HKPF.
Of course in the end of the day, it is Carrie Lam that asked the HKPF to be restrained. You can't truly blame the HKPF for not doing their jobs when they could get prosecuted. It took the central government intervention to refute any attempts to set up a grand jury to investigate the HKPF. HKPF was worrying that they would get throw under the bus by Carrie Lam.
There is a discussion about setting up a temporary prison at the HK football stadium. Using an island prison might feed more conspiracy theories that cook up by the oppositions to discredit the HKPF. The problem is that the HK government needs to use the Emergency laws to grant the HKPF extra powers and extend the time of detainment. That goes back to your assessment, lack of political will.
Without the article 23, there are not much you can charge the conspirators behind the rioters. Majority of the ringleaders are just figurehead. Joshua Wong, Martin Lee, and Jimmy Lai are all dispensable. Using the emergency laws to shutoff Telegram, LIHKG, Appledaily, and Golden is probably easier and more effective.