After months of consideration, Attorney General Eric Holder on Monday appointed a special prosecutor to examine allegations that terror suspects were abused at the hands of their CIA interrogators.

The highly controversial decision comes as the Department of Justice released a 2004 report from the CIA's inspector general detailing allegations of harsh interrogation practices -- which Holder cited in his decision. 

"As a result of my analysis of all of this material, I have concluded that the information known to me warrants opening a preliminary review into whether federal laws were violated in connection with the interrogation of specific detainees at overseas locations," Holder said in a written statement Monday. 

The newly-released document claims one interrogator said a colleague once told Sept. 11 mastermind Khalid Sheikh Mohammed that if any other attacks happened in the United States, "We're going to kill your children." 

Another interrogator allegedly tried to convince a different terror suspect detainee that his mother would be sexually assaulted in front of him -- though the interrogator in question denied making such a threat. 

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Several details in the review had already been reported, such as the alleged use of mock executions and other tactics to scare detainees. 

The report said interrogators threatened Abd al-Nashiri, the alleged planner of the 2000 USS Cole bombing, by holding a power drill and handgun to his head. The report said they also staged a fake execution by having CIA officers and guards scream and yell in an adjacent cell and then leading the detainee past a hooded, motionless guard -- who was lying on the floor and made to look like he had been shot. 

The report concluded the CIA used "unauthorized, improvised, inhumane" practices in questioning "high-value" terror suspects.

Holder had reportedly reacted with disgust when he first read accounts in the classified version of the IG report -- a reaction that likely contributed to his decision to appoint a prosecutor. 

Holder said in his statement Monday that a "preliminary review" of such cases is the "only responsible course of action" for him to take. 

Justice Department prosecutor John Durham will be named for the job. 

Holder's move would reverse the policy of the Bush administration and could expose CIA employees and agency contractors to criminal prosecution for the alleged mistreatment of terror suspects in the years after the Sept. 11 attacks. 

It would also run counter to President Obama's stated wishes to leave the issue in the past. White House Press Secretary Robert Gibbs reiterated that view in a brief statement Monday. 

"The president has said repeatedly that he wants to look forward, not back," Gibbs said, adding that those who acted in good faith should not be prosecuted. "Ultimately, determinations about whether someone broke the law are made independently by the attorney general."

But Holder stressed that the review is not yet a full investigation, and that even a full-scale probe does not mean charges are in order. 

The attorney general noted the controversy the decision is sure to generate but said it should not be taken as a blanket criticism of the U.S. intelligence community. He said those who acted in the scope of the legal guidance provided to them will be safe from prosecution. 

"I fully realize that my decision to commence this preliminary review will be controversial," Holder said. "As attorney general, my duty is to examine the facts and to follow the law. In this case, given all of the information currently available, it is clear to me that this review is the only responsible course of action for me to take."

Prior to Holder's decision, the Justice Department's ethics office had recommended that a number of alleged CIA prisoner-abuse cases that were closed under the Bush administration be reopened.

The Washington Post reported that up to a dozen cases could now be examined. 

In a memo to the agency Monday morning, CIA Director Leon Panetta urged his staff to stay focused in the face of the "politicized" debate the report is expected to stir up, and defended the way the agency has handled allegations of abuse over the past several years. 

"This is in many ways an old story," Panetta wrote, saying many of the techniques have already been made public. He wrote that the CIA obtained intelligence from high-value detainees "when inside information on Al Qaeda was in short supply," and that his role now is to "stand up" for officers who followed the legal guidance given to them. 

Parts of the report suggest the intelligence gleaned through the enhanced interrogations was invaluable -- but it also is not clear whether that intelligence could have been extracted through more conventional interrogation methods.

 Former Vice President Dick Cheney said the documents "clearly demonstrate that the individuals subjected to Enhanced Interrogation Techniques provided the bulk of intelligence we gained about Al Qaeda.  This intelligence saved lives and prevented terrorist attacks."

"The activities of the CIA in carrying out the policies of the Bush Administration were directly responsible for defeating all efforts by Al Qaeda to launch further mass casualty attacks against the United States.  The people involved deserve our gratitude.  They do not deserve to be the targets of political investigations or prosecutions."

According to a memo by an unknown author included at the end of the report, the program was considered an "absolute success." 

The memo said detainees provided information that led to the arrest of other terrorists and revealed a number of terrorist plots -- including a planned attack on the U.S. consulate in Karachi, Pakistan; a plot to derail a train; a plot to blow up several gas stations; and a plot to attack the tallest building in California. 

A federal judge had ordered the IG report made public Monday, in response to a Freedom of Information Act lawsuit filed by the American Civil Liberties Union

Both the report and the announcement of a probe drew split reactions from lawmakers on Capitol Hill

Democrats like Sen. Patrick Leahy, Vt., said the report showed "clear evidence" interrogators overstepped their bounds. Republicans like Rep. Pete Hoekstra, Mich., said the probe "risks disrupting CIA counterterrorism initiatives."

In another development, Obama signed off on setting up a special interrogation team that would be placed at the FBI but report directly to the White House-based National Security Council

Though such work typically falls to the CIA, one senior U.S. official told FOX News that the CIA did not want to house the new initiative. 

"They're glad to be out of the long-term detention business," the official said. 

The unit's structure would depart significantly from such work under the Bush administration, when the CIA had the lead and sometimes exclusive role in questioning Al Qaeda suspects.

FOX News' Mike Levine, Catherine Herridge, Jennifer Griffin and The Associated Press contributed to this report.