Wikipedia was the first result. I have no fucking clue what the endgoal was supposed to be nor what was meant to be accomplished aside from adults getting off.
the "idea" was, take some street or otherwise neglected kids, and give them to someone who might have a reason to actually give a shit about them (even if it's only to diddle). keep in mind he also called them "secondary mental defectives", so they were not only neglected but most likely also had other issues (probably one reason they were abandoned and neglected in the first place), which means "resocializing" - however you want to define that - would be even more difficult (and expensive). germany has a foster system, but like the US the believe is that it's "better" for everyone involved to keep them in a small household, preferably their parents, instead of putting them in a group home which is a lot less "stable" and individual kids get less attention etc. (and it's cheaper of course...). removing a kid from their parent, now matter how shit the situation, never goes over easy, especially for the kids who often can't even comprehend what's "wrong". but going into that would drag the post even more offtopic...
also, given current clown world, you really want groups of kids and young adults raised by the state...?
EDIT: there's also the aspect which is completely offtopic how people in charge of raising other people's kids need to be constantly vetted and trained, yet somehow the state let's every retard procreate now matter how unfit that person is to be a parent.
from a very cynical point of view it actually makes somewhat sense. but hold your trashcans, it makes sense if you only look at a) the cost and b) the wanted outcome. "the result justifies the means" isn't always the best course of action, especially if outcome has a good chance of causing severe issues down the line (for the kid and possible others), which means it's nothing more than a bandaid.
the most obvious issue is that a "lover" can't be a good "parent", and even you go by the very broad definition of "loving children in a platonic way" with no diddling involved whatsoever (slim chance) you'd still have to consider how the future adult will be affected.
that being said tho, kids are a lot more resilient than people give them credit for, this whole "kids are naive little babies who have no agency or brain till their 18th birthday" shit that rose the past 1-2 decades might be even more damaging when it comes to future generations...