When Scorpio is initially arrested in the film, there is a wealth of evidence against him. The leg wound proves that he is indeed Scorpio, as it matches the leg wound which Harry inflicted at Mount Davidson Cross a few hours prior to his apprehension. As such, he could also be charged with assaulting a police officer, attempted murder and embezzlement. Additionally, the sniping rifle he used to shoot the swimmer and the young boy is captured, and, as Harry points out, ballistics would be able to match the gun to the bullets which killed them. Basically, there is plenty of evidence to prove beyond all doubt that the man in police custody is indeed Scorpio. However, despite all of this plain evidence condemning him, Scorpio is released by the police. Why? Basically, because of procedural negligence on Harry's part.
Important in understanding exactly what is going on here is the scene immediately after the body of Ann Mary Deacon is found. Harry is in District Attorney William T. Rothko's (Josef Sommer) office and is told by Rothko, "you're lucky I'm not indicting you for assault with intent to commit murder. Where the hell does it say you've got a right to kick down doors, torture suspects, deny medical attention and legal council? Where have you been? Does Escobedo ring a bell? Miranda? I mean, you must have heard of the fourth amendment. What I'm saying is, that man had rights." An unrepentant Harry responds to this by saying, "Well, I'm all broken up about that man's rights." Rothko then retorts "You should be. I've got news for you Callahan; as soon as he's well enough to leave the hospital, he walks." A stunned Harry asks "You're letting him go?", to which Rothko responds "We have to, we can't try him [...] I'm not wasting half a million dollars of the tax payers' money on a trial we can't win. The problem is, we don't have any evidence." Indicating Scorpio's rifle, Harry asks "What the hell do you call that?" to which Rothko answers, "I call it nothing, zero [...] This rifle might make a nice souvenir, but it's inadmissible as evidence." Harry demands, "Who says that?" and Rothko tells him "It's the law." Rothko then introduces Judge Bannerman (William Paterson), who tells Harry "In my opinion, the search of the suspect's quarters was illegal. Evidence obtained thereby, such as that hunting rifle for instance, is inadmissible in court. You should have gotten a search warrant [...] The court would have to recognize the police officer's legitimate concern for the girl's life, but there is no way they can possibly condone police torture. All evidence concerning the girl, the suspect's confession, all physical evidence would have to be excluded [...] Without the evidence of the gun and the girl, I couldn't convict him of spitting on the sidewalk. The suspect's rights were violated under the fourth and fifth and probably the sixth and fourteenth amendment." Harry then bitterly asks "And Ann Mary Deacon, what about her rights? She's raped and left in a hole to die, who speaks for her?"
As Richard Schickel points out on his DVD commentary, this scene is vital to understanding the political ethos of the film; specifically, the issue of the rights of victims versus the rights of the accused. To fully understand this, some of Rothko's references need to be explained in more detail, specifically his references to Escobedo and Miranda. Escobedo refers to the 1964 court case Escobedo v. Illinois. This case involved Danny Escobedo's involvement in the murder of his brother, Manuel, on January 19, 1960. On January 30, the police obtained a witness who said that he had seen Escobedo's involvement in the crime, so the police arrested Escobedo, and began to interrogate him. During the interrogation, Escobedo asked to speak to an attorney, but when the attorney arrived at the police station, he was refused access to Escobedo until after the interrogation was over. Ultimately, Escobedo implicated himself as an accessory in the murder, and was convicted for aiding and abetting. Escobedo appealed to the Illinois Supreme Court, which initially held the confession inadmissible and reversed the conviction. Illinois petitioned for a rehearing and the court then approved the original conviction. Escobedo then appealed to the U.S. Supreme Court, which overturned Escobedo's conviction and recognized a suspect's right to an attorney during police interrogation. In 1963, the case of Gideon v. Wainwright had determined that a suspect had a right to an attorney after indictment, but the result of the Escobedo v. Illinois case gave a suspect the right to an attorney prior to indictment as well. With this in mind then, Scorpio's confession to the murder was elicited from him without the presence of an attorney, and as such, was inadmissible in court, as it violated his rights.
The other case to which Rothko refers is the 1966 case of Miranda v. Arizona. In March 1963, Ernesto Arturo Miranda was arrested for robbery. During his interrogation, he confessed to raping an 18 year old woman. During the trial, the prosecution offered as evidence both Miranda's confession and the victim's positive identification of Miranda. He was found guilty and convicted of rape and kidnapping, and sentenced to 20 to 30 years imprisonment on each charge, with sentences to run concurrently. After the conviction, Miranda's attorney, John J. Flynn, appealed to the Arizona Supreme Court, where Chief Justice Earl Warren ruled that no confession could be admissible under the Fifth Amendment self-incrimination clause and Sixth Amendment right to an attorney unless a suspect had been made aware of his rights (right to an attorney, right to remain silent etc) and had specifically waived them. Miranda had not been informed of his rights, and as such, the conviction was overturned. Miranda was retried, and this time the prosecution did not use the confession. Instead, they relied on witnesses and other physical evidence. Miranda was again convicted in 1967 and again sentenced to 20 to 30 years. Following the Miranda decision, all police departments were required to inform suspects of their rights under the new ruling. Again, as with the Escobedo case, Harry Callahan does not follow the rules laid down by the Miranda case. He never informs Scorpio of his rights prior to Scorpio's confession, and as such, his confession is inadmissible.
With all of this in mind then, Harry makes four mistakes, which combine to ensure Scorpio can go free; he illegally searches Kezar Stadium (i.e., he does not obtain a search warrant), he interrogates Scorpio without the presence of an attorney, he does not inform Scorpio of his rights prior to that interrogation, and he tortures a confession out of Scorpio (by standing on his wounded leg).
In 1971, the Escobedo and Miranda decisions were still extremely hotly debated issues. Miranda in particular had generated a great deal of criticism, with many (including President Richard Nixon) feeling it was unfair to inform suspects of their rights, as it was essentially an invitation for them to purposely frustrate interrogation. Many felt that the Escobedo and Miranda decisions were essentially offering protection for the accused, and that police could find themselves unable to take immediate action, even when faced with incontrovertible evidence, lest the entire case be invalidated in court.
As such, the political debates at the time were almost entirely focused on the rights of the accused, and the film poses an extreme example of how the legal system could be so concerned with these rights (rather than the rights of the victim), that it could allow a known killer to walk free; Scorpio is protected by the very legal sanctions which were set up to protect the victims. As he says above, Harry is more concerned with the rights of Ann Mary Deacon than with the rights of Scorpio, and in this sense, his line "Well, I'm all broken up about that man's rights" is paramount. Clint Eastwood has always maintained that the main reason he did the film was because he felt that in all the discussions concerning the rights of the accused, the rights of the victim had been forgotten about, and he felt the film went some way to return those rights to the public eye. No scene is more important in this sense than the scene between Harry, Rothko and Bannerman. All three know that the man Harry arrested is a serial killer, and there is ample evidence to support it, but because Harry did not abide by the decisions of the Escobedo and Miranda cases, Scorpio's obvious guilt becomes irrelevant, and he is allowed to walk free.
As such, many interpret the film as a manifestation of the frustration which was felt due to the recently established laws which seemed to make it easier for criminals to get away with criminal behavior and harder for police forces to convict them. The film shows the world from Harry's perspective, and it explicitly deals with his frustration in his attempts to dispense justice only to be rendered impotent by the red tape of the system he is sworn to uphold; technicalities getting in the way of what most people would consider justice. He is frustrated with a system that can overlook the victim due to the attention it is paying to the accused (this is why he throws his badge away at the end). The fact that Scorpio can walk free despite everyone knowing he is a killer is an illustration of how the system can actually hinder the police and aid the criminal.
Interestingly however, on his DVD commentary, film critic and Clint Eastwood biographer Richard Schickel questions whether the release of Scorpio is really accurate or not, hypothesizing that the film's depiction of the police letting him go without any surveillance whatsoever despite the ample evident isn't entirely realistic, and despite Harry's breaking numerous laws and ignoring several of Scorpio's right, no police force in the world would release such a man on his own recognizance.