This really needs to be fixed ASAP. Crime is out of control without it.
I did notice the following mention in 1.70 Change Log
However that is not what Orbital Prison says. The description says that an Orbital Prison is a place to send "ALL" your worlds criminals. That's exactly how it used to work and IMHO that's what it should do. Orbital improvement slots are too valuable to have to use one on every core planet. Using a colony slot to built an Orbital prison is the way to go.
You could restrict the benefit to the system it's built in and I could live with that as still beneficial.