Updated

Families of the victims of the infamous 1988 Lockerbie plane bombing are outraged that the Libyan man responsible for killing 270 people -- most of them Americans -- may soon be released.

Officials in Scotland said Thursday they are considering early release for Abdel Baset Ali al-Megrahi, who is the sole person convicted in the December 1988 bombing of Pan Am Flight 103 over the Scottish town of Lockerbie. The former Libyan secret service agent, who is serving a life sentence in a Scottish prison, has terminal cancer and could be freed as early as next week on compassionate grounds -- much to the dismay of the U.S. State Department, which said Thursday al-Megrahi should remain in jail.

"It's absolutely grotesque and hideous," said Susan Cohen of Cape May Court House, N.J., whose 20-year-old daughter, Theodora, was aboard the London-to-New York flight.

Cohen said her daughter was a drama major at Syracuse University who was returning to the U.S. from a semester abroad when the plane blew up. "She had a beautiful voice," she said. "That voice has been stilled for many years."

"We have had nothing you would call justice for the mass murder of 270 people -- the worst terrorist attack before 9/11. And this has nothing to with compassion -- it's all about oil," Cohen told FOXNews.com.

She said Libyan leader Muammar al-Qaddafi will feel vindicated if al-Megrahi is allowed to return to Libya -- and that the U.S. and other countries will do little to intervene because of oil interests in the Middle East.

"The powers of the world believe that Qaddafi has to be pacified, and part of that has to do with al-Megrahi's release," Cohen said. "The man is a tyrant, but he has oil."

She said al-Megrahi's release would send a dangerous message to terrorists. "You want to kill Americans, be patient, and in the end, if you have oil, you'll get what you want," she said.

Libya's relations with the West have changed since al-Megrahi's conviction in January, 2001. Qaddafi reconciled with the U.S. and its allies following the Sept. 11, 2001, terrorist attacks. He renounced terrorism and voluntarily dismantled Libya's secret program to develop nuclear weapons -- earning commitments from Britain and the United States to work together to contain the threat of international terrorism.

President Obama shook hands with al-Qaddafi as they posed for pictures ahead of a G-8 summit dinner hosted by Italian President Giorgio Napolitano in July.  The diplomatic gesture was aimed at reaching out to controversial world leaders in an effort to improve the United States' standing around the world, which Obama says was damaged by former President Bush's unilateral diplomacy.

"The president shook Qaddafi's hand. I wish he'd shake mine," said Cohen.  "I'd like to meet with him about this."

The Scottish government has dismissed as speculation reports by Sky News and BBC television that al-Megrahi could be released next week, saying the country's justice minister has yet to review all the information in the case.

"The review is ongoing," government spokeswoman Fiona Wilson told the Associated Press, adding that Scottish Justice Minister Kenny MacAskill had yet to review the entire case file. She said she expects a decision by the end of August.

"He showed no compassion when he murdered our son along with 269 other people, and I see no reason why we should show compassion anywhere but in the prison cell he is currently in," said Peter Lowenstein, whose 21-year-old son Alexander died in the attack.

Bob Monetti of Cherry Hill, N.J., whose son Rick also died in the bombing, told FOXNews.com that he is more outraged over the media coverage of al-Megrahi than in his actual release.

"Of course I'm against it," Monetti said. "But this man is like a tool -- he did what he was told to do. Why does that make him a celebrity? Why do we care whether he lives or dies in a hospital?"

Monetti said former President Bill Clinton "promised" the victims' families that al-Megrahi would serve out his life sentence in Scotland. Monetti said he hoped Secretary of State Hillary Clinton will intervene if Scottish officials release him.

State Department spokesman PJ Crowley told reporters Thursday that the U.S. has "made our views clear to the UK government -- to other authorities -- that we believe that he should spend the rest of his time in jail."

"We're not aware that there's been a final decision," Crowley said.

The Associated Press contributed to this report.