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If you cannot make the trip to a town, you can also dump prisoners in the nearest fief so long as their dungeons are not full already. You'll be awarded some influence for that, especially if you "donate" noble prisoners of enemy realms.
You can also sell brigands to slavery as part of a quest in villages with mines which are in need of manual labor. This is not possible with soldiers.
And the final options are cutting them loose for no effects, or take them into your party. The latter can be highly advantageous: Certain types of bandits can be upgraded into noble troops, such as Battanian Fians or Khan's Guards. You should take the perks from Leadership and Roguery to facilitate this. It can also save plenty of money and time from making recruitment trips if you can recruit noble troops or cavalry which are already equipped with war horses.
It should have been fixed a long time ago. But it doesn't make much of a difference either way.
The game keeps track of Wanderers so maybe it does keep track of overall population and behaves accordingly.