My current idea of how this episode should look goes something like this (obviously open to alternative suggestions):
Opening - Flashback to the Trial of Melkor at the end of the War of the Powers. The audience learns that his imprisonment had a time limit on it.
Some indication that we've reached the end of that time, and Melkor is brought to his...parole hearing. Most of the Valar and some elves(?) are present.
The first Vala to speak basically suggests locking Melkor back up until the end of Arda. Melkor says his part about wanting to fix the things he broke. There is more grumbling from the other Valar about how that's not a good enough reason. Melkor explains that he acted in anger before, but he regrets that now and that is not who he was meant to be. Then Nienna speaks up, saying that he needs to be given the chance to show he has changed. Manwë agrees, but puts a bunch of restrictions on him. Melkor will remain in Valmar and be accompanied by another Vala at all times. Melkor, to everyone's surprise, agrees to these terms and says something like, 'That's only fair.'
Everyone is very suspicious of Melkor. He interacts with some of the Vanyar quite cordially, but they give him a wide berth. Oromë is annoyed that Melkor got let out, and is undecided between insisting on guard duty himself, or getting out of Valmar so he doesn't have to look at the guy. He goes out on a hunt to blow off some steam, and we meet Celegorm (3rd Son of Fëanor) who is friends with the hound Huan in Oromë's entourage.
One of the Valar who is very concerned (Tulkas?) comes to Manwë and Varda and has a private conversation with them about how they can't do this, it's a terrible idea. Manwë has the opportunity to say what he really thinks of his erstwhile brother, and why he is giving him this chance. Interlocuter!Vala is unconvinced, and says Melkor will be locked up again shortly, but it's just a question of how much damage he does in the meanwhile.
Meanwhile, back in Tirion - no Melkor here yet. Fëanor has quarreled with Fingolfin (again), and Finarfin is trying to act as a peacemaker/go-between. Meanwhile, we see that their eldest sons (Maedhros son of Fëanor and Fingon son of Fingolfin) are great friends who are getting sick of the tensions between their families and would like to heal the rift. Not sure what ideas they come up with. Indis (and her daughters?) are the transition back to Valmar.
Meanwhile, in Valmar, Melkor has been on *impeccable* behavior. He's shown humility and good humor. He's been helpful and friendly. He is not at all the Melkor he was before. At least one of the Valar/Maiar starts to have doubts. Has he really changed so much, as he seems to? This character seeks out Nienna, to ask her if she thinks that Melkor's change is sincere. Does she? Or does she limit herself to speaking of the *potential* of the situation?
Melkor does *something* to gain a lot of trust. WHAT? We need to come up with some action he could take that would convince people he's no longer bent on world domination and monster creation. [And yet still be very...Melkor-like.] Does it have something to do with Tol Eressëa? That was 'his' volcanic island. Ulmo and Tulkas remain unconvinced. Námo remains strangely silent on all of this.
By the end of the episode, Melkor has convinced the Valar of his good intentions, and Manwë relaxes the terms of the parole. He still has to stay in Valinor (he's not allowed to go back to Middle Earth), but he has more freedom of movement and fewer gaolers minding him and following him about all the time. He is able to visit the Two Trees and Tirion and Alqualondë. He...takes no interest in Alqualondë (water is not his thing), but seems quite taken with Tirion.