This story is about the Hippie days without the idealization of flower power. While an ending with a reconciliation might have been possible, for many who lived the scenario being painted, reconciliation and redemption of the wounded soul did not happen. Hinton writes about what often happened--not about what seldom happened.
Mark being freed and becoming buddies with Bryon again would not have been realistic--life rarely works that way, especially in a Hinton novel. I didn't like Bryon's decision to turn his friend in, but the result was predictable. Mark was not going to change his ways--inside or out of jail, and it would have been hard for anyone to forgive Bryon. Bryon, however, was not a totally lost cause, and in the end, he is better off without Mark's terrible influence. After all, how would Hinton's title--"that was then, this is now"--have come to fruition if the two boys made up?