And he is attempting to break/get out of prison. It seems like his prison isn’t on earth but it may not necessarily be on Mars or even in space, he could be in another dimension. Also, perhaps he was put there by Dr. Manhattan as punishment for his attack on New York.

I believe Louis Gossetts character grows up to be Hooded Justice. The colors of his coat match that of HJs costume and notice both the dead guy in the bay (on the TV show within Watchmen) and Don Johnson’s character were both missing the same shoes.