It could work, however say an older player ends up getting punished for whatever reason, Its unlikely they would have the other prisoners best interests at heart. Say, butcher then with a capitalship?
Then again, an older player is much easier to hit with a hefty fine.
On the flip side, new players that break the rules would be in starfliers, or close to it, not really an entertaining fight.
The reason a prison system is useful(rather than a ban) is its easier just to send 1 character to the prison. I mean, new players don't have nearly enough money to fine them a decent amount. Whereas whats $20mil to older players? Less than 2 runs in a large train.