"Mr Taylor is considered to present with a unique offending profile and set of offence-related risk factors that could benefit from brief intervention," the panel convener, Jim Thomson said.
The prisoner is serving a term of three years three months on charges of attempting to cause grievous bodily harm, assault with a weapon and intentional damage, a sentence which ends in December 2022.
On September 4, 2019, Taylor abruptly quit his job at a Tapanui business, bought a tomahawk from a shop in Gore, strapped a knife to his leg and drove off in his Subaru.
After scouring the roads looking for police cars, he found Constable Steven Treloar sitting in his patrol vehicle, having pulled over a motorist.
The defendant blasted ''religious music'' on his stereo and slammed into the back of the officer's stationary car.
Const Treloar called for back-up and fled from the axe-wielding criminal on foot.
Taylor gave up the pursuit after 40m, only to return and inflict $30,000 of damage to the vacant police car, using the tomahawk.
Officers who rushed to the scene found the man wearing a police hat and jacket and yelling excerpts from the Koran.
A charge of attempted murder was initially laid against Taylor after stunning disclosures he made to a Corrections staffer while in custody.
He said he planned to decapitate his victim and wave the disembodied head around so he would be shot by other officers.
''I've been planning to kill someone for three to four months before I did it,'' Taylor said.
''This was the first police officer I came across that was a good target.''
The Parole Board in January heard Taylor did not engage well with Corrections staff but more recently had acted "appropriately and politely".
A psychologist who assessed the prisoner, though, expressed concern about how he might cope with life outside the wire.
"Mr Taylor will be exposed to a number of stressors when he is released and that risk will be particularly heightened, given the profile of his offending," Mr Thomson said.
"The psychologist considers that Mr Taylor's offending occurred as part of a long-term long-standing and enduring pattern of psychological regression and instability."
He will see the board again next year.