Well since we're on the topic and I think about this stuff way too often, here's my solution.
1.Grant the Circle autonomy and establish as many schools in towns and cities as possible. These would not be prisons, mages would not be forced to go there (though their parents or themselves would be informed that if they did not they would be a chance that they could turn into a monster and start killing people), they would be their temporary homes where they would learn how to control their powers. They would be allowed to visit their homes often, and once they reached the age of a adult, they could leave and live their own lives.
2.Templars would become more of a police force than prison guards. They would be tasked with policing any mage or demon activity that could harm anyone.
Merrill has my absolutely favorite line in Dragon Age 2 "fear makes men more dangerous than magic ever could." And she's completely right. Most of the harm mages do is out of fear and the loss of their individual freedom, as well as any kind of normal life. This isn't going to solve the problem completely. Mages are still going to turn into abominations and will still at times misuse their powers, and people are still going to die and get hurt because of it. But treating all mages like prisoners and taking away their rights, only makes those things far more likely too happen.
Well, a scared normal person can't give into their fear and turn into an abomination and slaughter their entire village before the Templars arrive... No offense lol, but I don't think Merrill offers ANY wisdom at all. Over the course of DA2, she believed demonic lies twice and nearly got possessed twice. Once in the Fade with Feynriel, and another time when Marethari sacrificed herself to save her.
1. I sort of agree with this; except for one thing. Mages must go to the circle, there would be no option. Knight-Commander Meredith as a child had a sister, who was also a mage. Her family kept her a secret, until the day she turned into an abomination and killed 72 innoecents, including her mother and father, before dying herself. That taught Meredith a harsh lesson.
So.... everyone must be sent to the circle to receive teaching.
Being locked away forever and having no freedom or communication with family is wrong, but having to stay in the Circle until they pass their Harrowing is the surest way to ensure that no weak mage becomes an abomination. There will always be the odd Blood Mage or insane mage that rises up in the ranks anyways like Uldred, but is there any way to stop people like that anyhow?
2. They exist to protect mages, and protect others from mages. Too many Templars seem to forget that, and think of themselves only as "Mage-Killers". Which isn't what the order should stand for.
Not only that, but the Chantry must try to put out the message and raise awareness about what mages really do. Truthfully; people think mages are either wise old men reading books all day or insane demon-summoning killers, all depending on whatever rumor they've heard. If Thedas had the internet, this wouldn't be a problem.