Ideally, the authorities would judge each case on its merits eg suitability of individual/species for life in captivity, suitability of applicant etc.
That would be the ideal but I suspect the blanket rule “release or kill” is more about expediency.
It is too hard for WIRES to scrutinize every potential owner with the same consistency across the districts, so better to say no and just knock the animal off.
With bird keeper licenses that effectively grade people on if they have the experience and skills to keep the more demanding species, I think that the WIRES system could easily dovetail in with that.
With seriously threatened biodiversity in Australia, I think the rarer species with minor but not releasable glitches should be kept alive as a kind of gene bank we might really need in the future.
WIRES has its own very dysfunctional management problems anyhow. Volunteers have left in droves. A lot of people don’t trust them anymore.
The general thought is – don’t give it to WIRES they will kill it. That leaves the animals nowhere.