Multiple problems with the idea. Sigh.
First, Riot simply wants people to behave better in their game. Simply moving the trolls doesn't help them reform and will actually cause more of them to not reform in the long run.
Second, the goal of the tribunal is reformation. Reforming is a lot less likely when you put a bunch of bad people together and tell them they broke the rules, it's just going to make them more likely to misbehave then anything creating a cycle where people are effectively stuck in there.
Third, it either becomes a mark of honor, or a mark of shame causing people to make new accounts just to get rid of it, which negates the problem in the first place.
Overall, it sounds like a good idea, but is fairly hollow. (Yes, I've suggested it before... and failed. :P)
Edit: Oh noes. I've disagreed with GD. Downvotes so that way they get blood!