This reminds me in so many ways of THE FUGITIVE. It was filmed about a decade earlier than the Harrison Ford version but it was also filmed much later than the original tv series. The cop on his trail reminded me of Sam Gerard.
Why did he let the guy go in the end? Did he figure out that the guy was innocent and just want to prove to himself that he still had what it took? That was a strange scene.
I think you're half right. I wouldn't say Schneider was innocent - he did punch out his boss and got caught drinking while driving, but yeah, the corrupt justice system did throw the book at him.
But I think Douglas' motivation was just what you said - I think he was more interested in the pride of catching him, rather than putting him back behind bars. From the beginning of the movie he was shown as not fitting in with his peers: he was walking around in a nice suit while his coworkers were dressed much more casual western, he was from New Jersey and seemed to have his fill of cowboy justice, etc.
BTW the movie is playing on Encore this month if anyone has a chance to catch it.