Very very tough question. Personally, I can't come to a conclusion to whether he should be released or not. As you've mentioned, he is a dying man and he serves very little threat to the community if he was to be released.
The other side to the argument is that he still has around 25 years of his jail term to be served and if he was to be released, it would basically say to prisoners 'Escape from prison, hand yourself in when you're and old man and very ill, we'll feel sorry for you and let you go again'.
But the guy was a bit of a genius. Escaping to Australia, then travelling to Brazil, having a child in Brazil which meant the Brazilian authorities would not allow him to be extradited, as well as sneaking back into the Coutry several times in disguise.
It would be a shame for him to die in Prison.
I think the least the Prison service or whoever should do is allow him to be transferred to a more open prison. He doesn't deserve to be in the highest security prison in England along with the likes of Abu Hamza and such.