The Federation doesn't have the death penalty
Yes it does. Talos IV.
and, lets face it, being disassembled indefinitely is the same thing as death.
No, because disassembly can be followed by re-assembly. If Lore had been vaporized by a phaser, then that would be death. But he was taken apart, nothing more; thus he could theoretically be put back together again.
But as I said, Lore was dangerous. An immediate menace. Disassembling him was, in effect, self defense. They could not take the chance that Lore would escape again. Keeping him disassembled serves the greater good.