@Peachrocks: It doesn't have to take place at Bullworth. Bullworth could be just one part at a later point in the game.
But I'm gonna go back to my example. Malcolm in the first Kyrandia game is suggested to have murdered the royal family, and turns many people into stone with his magic. He shows every sign of delusion, narcissism, and just evil. But despite this, in the third game he's actually trying to prove his innocence from the murder, and since he lost his magic, he relies on his wits to survive.
And yet despite all that, he retains his qualities, and I can definitely say they did a good job of turning him from a villain into a(n) (anti)hero.
Maybe, we could have Gary enroll at a new school after being discharged from Happy Volts, and is shunned by everyone due to his past rep. Then throughout the game, he has to rely on his wits to get around as he struggles with his inner self between his good side and bad side. His fighting abilities would be based on a progression system.