We used to do it in France, and whilst it was a bit of a ball ache for people (myself included) it actually was quite good fun. It taught you quite a lot that you didn't get at school, and IMO opened your eyes to the world a little. It certainly brought people together as we all had to do it. Even if you didn't want to, you ended up just giving your all because you soon learn to play as part of a team. I learnt lots of new skills too. It was deemed to be serious though, so not like a grown up version of CCF, you realised exactly what you were training for. Sure not everyone did frontline stuff, and there were at least 4 forces you could join at the time of national service in France. Furthermore, there are a lot of support functions that needed filling, not just frontline troops, relief aid, first aid, medical, science etc...
I kind of like the idea, but don't. Ignoring financial issues/points, and purely from the social/populous aspect, I think it's very interesting.
Doing it only for young offenders seems a little pointless, though a boot camp would certainly sort out these young people very well - it's an amazing environment to develop, re-assess, and learn, if done right.
Looking back on my life, although I've done a lot of amazing things and seen the world, I was flirting with the idea of joining the forces full time as an officer.