Ruairidh Boid (M.N. Saraf), "Use, Authority and Exegesis of Mikra in the Samaritan Tradition," Mikra: Text, Translation, Reading and Interpretation of the Hebrew Bible in Ancient Judaism and Early Christianity, ed. Martin Jan Mulder (Peabody: Hendrickson, 2004) 630-631.
We are told that Boethusians took the expression "an eye for an eye, a tooth for a tooth' in Exod 21:24 to mean that the same injury had to be inflicted on the perpetrator. Contrary to popular opinion, rabbinic exegesis interprets this expression the same way. The reason that monetary compensation can be substituted is that other verses show that the perpetrator is not to bear the consequences that he is actually liable to: instead, strict justice is to be suspended by mercy. The Boethusians, we are told, said that the perpetrator had to be made equal to the injured person. Contrary to popular opinion, this was actually their way of removing any physical penalty from the perpetrator. The Samaritans and some Karaites argue that a physical penalty can never legally be carried out, because no two people are in exactly the same state of health, physical condition, or age, or have exactly the same range of normal activities, which means that no physical penalty could ever be exacted appropriate in any case. The Karaite commentators use this legal technicality for the purpose of leniency...If I understand the author [of the Samaritan Kashif al-Ghayahib] correctly he raises the possibility that instead of a monetary fine, or compensation, no penalty at all may be legal.
My impression is that rabbinic exegesis does not interpret "eye for an eye" literally, although Boid/Saraf is correct that the rabbis bring in other passages to support their non-literal reading of Exodus 21:24. We can see rabbinic interpretation of Exodus 21:24 in Babylonian Talmud Baba Kama 83b-84a. Because reading the Talmud can be pretty daunting, I found Baruch Levine's summary in his JPS Leviticus commentary to be helpful.
There are at least four Scriptural reasons that rabbis interpret "eye for an eye" as monetary compensation, not as the literal removal of the offender's eye:
1. Numbers 35:31 states: "Moreover you shall accept no ransom for the life of a murderer who is subject to the death penalty; a murderer must be put to death" (NRSV). This passage says that an offender cannot give monetary compensation in the case of murder. For certain rabbis, that implies that he can give it for other injuries (i.e., to eyes, to teeth, etc.).
2. In Leviticus 24:18 says: "Anyone who kills an animal shall make restitution for it, life for life." This passage uses the phrase "life for life" (nephesh tachat nephesh), but it's not saying that a man should be executed for killing someone's beast. Rather, it affirms that the man should make restitution. The Hebrew word for this, shilem, often refers to monetary compensation (Exodus 21:34; 22:5-15; Leviticus 5:16; 6:5; etc.). Therefore, for the rabbis, the phrase x tachat x can mean monetary restitution.
But there are problems with this argument that the Talmudic discussion brings out. Such reasoning compares humans to animals, and it also places killing in the same category as injury. Therefore, a rabbi quotes Deuteronomy 22:29: "the man who lay with her shall give fifty shekels of silver to the young woman's father, and she shall become his wife. Because (tachat asher) he violated her he shall not be permitted to divorce her as long as he lives." Because Deuteronomy 22:29 uses tachat in reference to monetary compensation for the violation of a woman, the rabbi concludes that tachat can refer to that kind of restitution in other cases of human injury.
3. Leviticus 24:19-20 has: "Anyone who maims another shall suffer the same injury in return: fracture for fracture, eye for eye, tooth for tooth; the injury inflicted is the injury to be suffered." That's pretty straightforward against the rabbi's "monetary compensation" view, right? I'm not sure how the rabbis handled v 19. V 19 literally says "as he did, so it will be done to him," so maybe the rabbis argued that the text doesn't specify what would be done to him in exchange for the wound that he inflicted. V 20 is literally "so it will be given (yenaten) in him," and Rashi states the following:
"Our Rabbis explained that this does not mean the actual infliction of a wound, but payment of money. [And how is an injury estimated? The victim] is evaluated as a slave [if he would not have had the injury, and how much with the injury, and the difference is the compensation]. This is why Scripture uses the expression נְתִינָה, “giving,” [thereby alluding to] something that is “handed over (הַנָתוּן)” from hand to hand. — [B.K. 84a]"
Rashi, echoing the rabbis, associates the word "given" (yenaten) in v 20 with the fact that slaves are "given" from one person to another. The issue is this: If a man is wounded, how much money should the offender pay him? There were usually set values for slaves who were wounded. If a man injured someone else's slave, he had to pay the slave's master for the injury: the eye, the tooth, etc. of a slave had a specific value. So Rashi is saying that we should regard the victim as a slave for a moment to see how much money he should receive. For Rashi, yenaten means that the victim's injury is compared to that of a slave in order to determine the amount of compensation.
4. Leviticus 24:22 states: "You shall have one law for the alien and for the citizen: for I am the LORD your God." For some reason, a rabbi in the Talmud applies this to the notion that no bodily injury to an offender can be an equal retribution for what he did to his victim. If the offender is strong and injured a sick person, for instance, then the offender receiving the same injury is not exactly fair, since he can take it better than the person he hurt. The Samaritans and the Karaites had the same issue with a literal interpretation of "eye for eye," but they responded by suspending punishment. The rabbis, by contrast, imposed monetary compensation.
In some sense, monetary compensation makes more sense to me than the literal interpretation. If someone plucks out my eye, him getting his eye removed wouldn't help me out that much (though it might make me feel good!). But, if he paid me money, that would help me get through the economic difficulties of not having an eye.