Jury nullification is a jury's knowing and deliberate rejection of the evidence or refusal to apply the law either because the jury wants to send a message about some social issue that is larger than the case itself, or because the result dictated by law is contrary to the jury's sense of justice, morality, or fairness.
Libertarian jurors should always vote to acquit. The majority of criminal cases involve victimless crimes, so obviously we will want to avoid convicting them. But what about the crimes that do have victims? You should still vote to acquit, for several reasons.
When you vote "not guilty," you are not saying, "I favor letting this offender go with no penalty." You are saying, "I refuse to give my consent to the government's subjecting this person to the type and range of punishment currently prescribed by law, at taxpayer expense." There is a big difference.
When a criminal is sent to prison, he is incapacitated from earning much money to pay restitution to his victims. Federal prison rules prohibit a prisoner from running a business, and prison work opportunities typically pay very poorly. If the offender remains at liberty in society, he can earn money more rapidly and the victim can sue through the civil court system to obtain the restitution money he is owed. This is the fairest outcome for the victim.
Handling crime through the civil system, rather than through the criminal system, is also fairer for the offender. Suppose someone breaks your car window and steals your radio, costing you $300. If he can earn the restitution money in 3 days, why should he be penalized with months or years of prison? He should be given a chance to earn and pay the money as quickly as possible and get on with his life.
But what about the offender's potential to re-offend? That is not the government's concern. The government is an interloper that forcibly imposes its will in a matter that is properly between the victim and offender alone. Each person has a responsibility to provide for his own protection from crime. No one has a right to taxpayer-funded protection, any more than he has a right to demand food, clothing, shelter or any other necessary product at taxpayer expense.
Moreover, there are other means available for discouraging people from committing crimes and protecting ourselves from them. Ostracism is one such means. Service providers such as landlords, employers, etc. can check the records of applicants and reject those who have large restitution debts outstanding. Privatized neighborhoods can ban known offenders from their streets. And of course there is self-defense, which will be easier if government stops banning people from possessing firearms in so many places.
When the other jurors chastise you for your refusal to acquit, just remember that you have no choice in the matter. You have a moral obligation to acquit. It is not your fault that the government has prevented a free marketplace of private police, dispute resolution organizations, etc. from developing, and has put itself in the role of monopolist over criminal justice.
Besides, government itself lets guilty defendants go all the time, in the interests of preserving liberty. For instance, if police conduct an illegal search that turns up vital evidence, the court will suppress the evidence even if that prevents the offender from being convicted. Courts also acquit defendants when it is possible to prove the defendant guilty by a preponderance of the evidence, but not beyond a reasonable doubt. So government officials are hypocrites if they condemn a person for knowingly setting a criminal free, because they do it all the time.
For more information on how criminal justice can be handled without government, please see Murray Rothbard's For a New Liberty, Morris and Linda Tannehill's The Market for Liberty, and Bruce L. Benson's To Serve and Protect.