Is there a way to release (free) captured prisoners?

If you own any castles or towns I think you can put all your items in a chest in the lord's hall and all our troops in the garrison. Go unarmed with no troops with only the lords of the dead faction with you. Then you get in a battle and let yourself get defeated. Since all your items are in a chest and all your troops are in a garrison, all you should lose is your prisoners (the lords you want to set free).

After taking time to look for an answer, it would appear that aside from the options I suggested in my question, there isn't any way to manually free lords in order to open up prisoner slots at any given time. The best thing to do seems to be to let them escape on their own over time, or drop them off in a town's prison.

You can let non-lords go free when capturing new prisoners after a battle or hiring troops after a battle, but that's about as close as it gets!

Some additional help, if you drag them around with you (not in a garrison), in 72 hours, they have a 50% chance of escaping from you. Just take a bunch of them and drag them along with your party and do normal stuff until they "escape".