I know a fellow who confessed a serious crime to my [former] priest. Instead of reporting the crime to the cops, my priest convinced the penitent to go himself to the police.
I guess it's a difficult situation for counselors and doctors if the patient refuses to do the right thing.
As you said, even if the person is contrite, he must pay for his crimes in this life. It reminds of the Texas lady who became a 'born again' Christian while in prison, but she was still executed a few years back. She accepted the fact that her murderous past had to have consequences in our legal system.
Your priest behaved precisely as he is required to. I commend him highly.