Banishing them so they can join another nation, give'em your secrets & intel?
That's a disasterous idea.
Imprisoning them at large is also impractical because you're not locking up a clan that Danzo thought required his ANBU, Hiruzen's ANBU and both of them to successfully win. So you're just prematurely signaling the start of the coup.
So I see this brought up a lot, about sparing the children. Which like... Okay. So, off the gate—you're breeding a generation of Uchiha Sasuke's post chapter 400.
Uchiha with the mental instability of having their entire clan wiped out by Konoha, who have the potential to tap into the sharingan and potentially the mangkeyou sharingan—an eye so strong it allowed a fledgling kage tier shinobi in Taka Sasuke contend with a perfect bijuu.
So in 16 years minimum, you have a generation of threats. Cause you will never get these Massacre survivors to be loyal to Konoha, you're babysitting enemies and traitors.