Okay, I was sufficiently disturbed by this to start reading the Supreme Court official ruling, which can be found here:
http://www.supremecourt.gov/opinions/09pdf/08-1224.pdf
And now I feel a little better about it.
From what I can tell so far, there are three conditions required to continue to incarcerate the individual: (1) has "previously engaged or attempted to engage in sexually violent conduct or child molestation," (2) currently "suffers from a serious mental illness, disorder, or abnormality", and, (3) "as a result of" that mental illness, abnormality, or disorder is "sexually dangerous to others," in that "he would have serious difficulty in refraining from sexually violent conduct or child molestation if released."
So what happens if, prior to the release of a predatory sexual offender, the states already had (at least in some cases, from what I can tell) authority to continue to hold the person. This is extended that to the federal level.
It's someone acting in the capacity of the Department of Justice that would initiate this process. And even then, it's not a 'we say so, back you go!' deal. A federal district judge has to rule on whether or not the three conditions are met, and it's a trial where the accused has legal representation. There is supposedly a schedule of follow-up psychiatric evaluation and scheduled reviews, including judicial reviews every six months, so it's not locking up and throwing away the key necessarily (though I imagine in practice few would get let out, as everything I've read seems to indicate the violent sexual offenders have some mental disease that cannot be cured).
It talked about five people who had cases that were appealing to the Supreme Court, calling into question the Constitutionality of continued incarceration. So that's what the ruling is for, that in general IF THERE IS DUE PROCESS and conditions are met on the DOJ's side for establishing beyond a reasonable doubt the dangers, that the process of extending incarceration was not inherently unconstitutional. Individual cases were decided elsewhere, and it sounds like it was split between those where the decision to incarcerate them further was upheld, and those where they were released.