Prisoners sentenced to transportation often never left British waters, but were confined on prison ships (hulks) for the term of their sentence, in squalid and often lethal conditions. These were abandoned when the hulk Defence caught fire at Chatham in 1857, fortunately without loss of life. So McG's ancestor could well have returned after serving such a sentence.

The song is a bit odd- ex- prisoners were released, but not given a passage home. If he had been pardoned, he wouldn't have been in chains.   On the other hand, hearers of the ballad would be expected to be familiar with the reality, and the ballad wouldn't have been popular if the scenario wasn't reasonably possible.

Perhaps the early date, the 1800s, might be a clue. If only a few transport fleets had been sent, and many of the transportees had not yet finished their sentences, they might yet have been expected by the public to be sent home.