Do you recall that the times tranquility was cured, both former tranquils said that being made tranquil was worse than death and begged to be killed rather than be tranquil again.
Also, if tranquility is so useful, why not use it on non-mages like death row prisoners or prisoners in general? They can be useful and you don't have to bother wih them in prison or killing them since they have no emotions.
Also, I have a problem with something that results in you being okay with becoming a sex slave
i assume that tranquillity is not more widely used as a punishment because it isn't needed to punish mundanes. A mundane criminal is far easier to imprison than a mage, a mundane prisoner lacks the power so they can't become so desperate that they call in a demon to help them escape their punishment. The mundane prisoner may be that desperate but they lack the power rendering a more mundane sentence like imprisonment sufficient.
Tranquillity is a humane way to sever the magic from the person without killing the person in the process. Is it harmless? No. It is not harmless to incarcerate people either but a punishment isn't meant to be harmless. Tranquillity is a means to render the magic inert within the mage. There is no reason to render magic inert in people who have no magic, so why bother making them tranquil?
I also never equated the punishment as useful, I stated that the punishment doesn't render the person a mental pygmy. They are according to the lore cognisant and their metal capacity is so obviously not impaired as they can still create magic items and conduct scientific research which both activities require creativity and imagination.
As a punishment it has its place, and like any punishment it can be abused. Any prisoner can be coerced into being a sex slave, that doesn't make being a prisoner inhumane it makes specific treatments of the prisoner inhumane.