The Thuggees were a professional group of gangsters that were so well-established in India that they conducted a 600-year reign of terror in the country. Despite this long and bloody history, I believe that a change of character is possible for all individuals, even criminals. All it takes is faith in the goodness of their character (despite their outward actions), and encouraging that goodness to grow.
I believe it is possible to rehabilitate anyone on this planet. A thug is no different. If they live a life of crime and abuse, we should do what we can for that person, including mental counseling, or whatever has helped others in the past. I don't think institutionalizing every troublemaker is the solution to any problem.
First off, there is a big difference between thugees and today's thugs. Can today's thugs be rehabilitated? Of course they can, as long as they want to be. You cannot change someone who does not want to be changed but there are some that do want to live a more honest life
Rehabilitation has long been in debate and a vast majority of people think, "Once a criminal, always a criminal." But that isn't always the case. Criminologists believe there is a predisposed profile that will commit crimes, but with a strong moral compass and the right determination, any predisposition can be overcome. Just because you were a thug, doesn't mean you always must be one. That's why we have free will and the ability to make choices.