I think he was a good recruit and Capel doesn't want the stigma of having thrown the kid to the wolves at the first sign of trouble. Chances are, things are actually as bad as they sound and he is absolutely done already. Regardless, Pitt can allow him to remain a student while this passes through our slow American legal system, and then he can transfer out in good standing and potentially land at some other school willing to take a chance on him.
Even if Pitt (almost certainly) has zero interest in retaining him, there's no tangible benefit to exiling him as fast as possible. As was mentioned above, Capel might sincerely sympathize with the kid, even if he knows there's no possibility of reforming him at Pitt. This is probably a case where Capel the man is doing the kid a favor even if Capel the coach has his hands tied.