Maybe it was partly a warning to the Islamofascists and maybe it was partly to curtail the international flack that international sympathizer nations (like our RATs) would generate. In this way, Putin could still pursue the bad guys and kill them off while still looking reasonably humanitarian. In the event of another attack down the line, the moon god klan would know that their families maybe up for grabs too. Just a guess.
Muhammad approved of hostage taking and ransoming them, using them as bargaining chips. It's all in the KKKoran. These Chechnyan psychos merely emulate their prophet as the KKKoran commands them to do. The life of Muhammad is put forth as the most exemplary ever lived, one that all Muhammadans must copy.