Legalizing drugs is not a short-term solution to the incarceration problem. As bokonist pointed out (and you quoted), we'd still have record-high incarceration

Legalizing drugs is not a short-term solution to the incarceration problem. As bokonist pointed out (and you quoted), we'd still have record-high incarceration rates if everyone with a drug-related offense was released. However, the idea behind legalization is that it would reduce the incentive to commit other crimes, and that in the long-term, fewer people would be incarcerated, and so the incarceration rates would drop over time. I agree though that it is both a pipe-dream (unlike alcohol prohibition, drug prohibition is pretty popular) and a "magic bullet" (in that it sounds too good to be true, and thus probably is). There are many other causes of our high incarceration rates, but legalization is an important step in the right direction (in recognizing that we have created the wrong legal incentives).