I've heard it said that the out-of-universe reason DC comics created the Suicide Squad was to explain how villains the superheroes put away get back on the streets as quickly as they do- by completing dangerous missions for the government/military/Argus/whatever their sentences are commuted. Is there any truth to this or is it just sarcasm?
No, it was not invented as a way to justify criminals being released.
The original Suicide Squad, from Brave and the Bold #25, was comprised of Colonel Rick Flag, Hugh Evans, Jess Bright, and Karin Grace. None of which are notorious villains.
Colonel Rick Flag is the Suicide Squad's team leader, and pilot of the "flying laboratory," a plane with special equipment on board for analyzing and testing; Beside him sits Karin Grace, flight medic for the team who is secretly attracted to Rick; The lab section of the plane holds the astronomer Dr. Evans and physicist Jess Bright- The Brave and the Bold #25
Sometimes characters were brought in to be killed off, because they were suicide squads.
I even enjoyed the cannon fodder in the Squad – characters brought in to be killed off. - John Ostranders
So I don't see anything in the first occurrence for the first run of the stand alone series that suggests they were there just to justify the revolving door of the justice system that exists in the DC multiverse.