Drawing Lines

I listened to a lecture last night in which the lecturer engaged listeners on the importance of Child Protection Policies. It was a good discussion and lecture - I agreed completely on the importance of establishing policies for an organization that maintain the protection of the children they serve. However, the discussion when in an interesting direction.
One of the women in attendance mentioned her work with children ministries at her church. One of the men that has recently began attending her church is a registered sex offender. They have apparently set up very strict boundaries for this man when it comes to the interaction he can have with the congregation and especially the children of the church. He can only use one particular bathroom, sit in one area of the sanctuary, etc. While I agree there needs to be some hesitation in his aggressive involvement with the community I can't help but be a bit disturbed by the boundaries that are being drawn.
Where do we draw the line? How do we bring in grace? redemption? love and forgiveness? When Christ deals with the outcasts and those who have done the "unforgivable" and "unfathomable" sins - he welcomes them as the prodigal son. He treats them no different, extending the same grace we all need because we are all just as depraved.
So, where do we draw the line? Is it more important to keep our kids safe and draw a vivid line of protection policy allowing this man to only use one bathroom and sit banished to one corner of the sanctuary - or do we begin to forgive and extend grace, knowing that we are no better than he is. We are capable of the very same sin.