Lord Chief Justice Lord Judge, and two other judges in London, showed ''mercy'' to Hussain, 53, of High Wycombe, Buckinghamshire.
They overturned his 30-month jail sentence, replacing it with a two-year term, but ordered that it should be suspended.
Hussain's brother Tokeer, 35, had his 39-month jail term reduced to two years.
The brothers, described as family men at the heart of the local community, were jailed after being found guilty of causing grievous bodily harm with intent.
Neither man was present in court for the ruling.
The decision to free Munir Hussain was made by Lord Judge, Mrs Justice Swift and Mr Justice Sweeney - who yesterday rejected his bid to appeal against conviction.
Lord Judge said the case of Munir Hussain, who was jailed in December, was one of "true exceptionality".
A sentence of two years was in itself "merciful", but he added: "We have come to the conclusion that we have ample justification for ordering that it should be suspended."
Hussains ordeal began as he returned from his local mosque after Ramadan prayers on Sept 3 2008 to be ambushed by three masked men, including Salem.
He was threatened at knifepoint, tied up alongside his wife and three children, and held hostage on the floor of their living room.
When his 15-year-old son fled upstairs, chased by two of the masked men, Hussain turned on Salem and chased away.
Joined by his brother, who lived nearby, he cornered him in a neighbours garden and attacked him with a stick, leaving him with brain damage.
Salem was later deemed not fit to plead to charges of false imprisonment and given a supervision order.
But the brothers were convicted of causing Salem grievous bodily harm at Reading Crown court last year.
Munir Hussain was jailed for two and a half years by Judge John Reddihough while his brother was given 39 months.
Barristers representing the brothers, who live near each other in Desborough Road, High Wycombe, had urged the court to show mercy in an "exceptional" case.
Lord Judge said the "call for mercy" had been intense and the court had concluded that it "must be answered" to the extent of reducing both sentences to two years - but suspending that of Munir Hussain.
He added: "This trial had nothing to do with the right of the householder to defend themselves or their families or their homes.
"The burglary was over and the burglars had gone. No one was in any further danger from them."
There was no dispute that "professional criminal" Salem, 56, who was living in Borehamwood, "was subjected to a very serious attack by four men during the night of September 3, 2008".
The Hussain brothers denied being involved in that violence.
Lord Judge said Munir Hussain had been "desperate" with worry about his family when they were faced with armed, masked burglars, fearing that his wife and daughter would be raped and they would all be killed.
But after Salem was chased down the street by a group of Asian men he was attacked on the ground when "completely defenceless" and his injuries included a fractured skull, a fractured jaw and ribs.
Lord Judge said the combination of events which culminated in the serious injury suffered by Salem were "highly unusual".
He added; "This is not, and should not be seen as, a case about the level of violence which a householder may lawfully and justifiably use on a burglar.
"It is also clear that the violence to which Salem was subjected was not designed to ensure that he was detained and somehow kept pending the arrival of the police to be handed to them.
"So far as both these appellants was concerned the purpose of their violence was revenge - to teach at least one of the burglars a lesson... such violence is not lawful and no one at the trial suggested that it was."
They overturned his 30-month jail sentence, replacing it with a two-year term, but ordered that it should be suspended.
Hussain's brother Tokeer, 35, had his 39-month jail term reduced to two years.
The brothers, described as family men at the heart of the local community, were jailed after being found guilty of causing grievous bodily harm with intent.
Neither man was present in court for the ruling.
The decision to free Munir Hussain was made by Lord Judge, Mrs Justice Swift and Mr Justice Sweeney - who yesterday rejected his bid to appeal against conviction.
Lord Judge said the case of Munir Hussain, who was jailed in December, was one of "true exceptionality".
A sentence of two years was in itself "merciful", but he added: "We have come to the conclusion that we have ample justification for ordering that it should be suspended."
Hussains ordeal began as he returned from his local mosque after Ramadan prayers on Sept 3 2008 to be ambushed by three masked men, including Salem.
He was threatened at knifepoint, tied up alongside his wife and three children, and held hostage on the floor of their living room.
When his 15-year-old son fled upstairs, chased by two of the masked men, Hussain turned on Salem and chased away.
Joined by his brother, who lived nearby, he cornered him in a neighbours garden and attacked him with a stick, leaving him with brain damage.
Salem was later deemed not fit to plead to charges of false imprisonment and given a supervision order.
But the brothers were convicted of causing Salem grievous bodily harm at Reading Crown court last year.
Munir Hussain was jailed for two and a half years by Judge John Reddihough while his brother was given 39 months.
Barristers representing the brothers, who live near each other in Desborough Road, High Wycombe, had urged the court to show mercy in an "exceptional" case.
Lord Judge said the "call for mercy" had been intense and the court had concluded that it "must be answered" to the extent of reducing both sentences to two years - but suspending that of Munir Hussain.
He added: "This trial had nothing to do with the right of the householder to defend themselves or their families or their homes.
"The burglary was over and the burglars had gone. No one was in any further danger from them."
There was no dispute that "professional criminal" Salem, 56, who was living in Borehamwood, "was subjected to a very serious attack by four men during the night of September 3, 2008".
The Hussain brothers denied being involved in that violence.
Lord Judge said Munir Hussain had been "desperate" with worry about his family when they were faced with armed, masked burglars, fearing that his wife and daughter would be raped and they would all be killed.
But after Salem was chased down the street by a group of Asian men he was attacked on the ground when "completely defenceless" and his injuries included a fractured skull, a fractured jaw and ribs.
Lord Judge said the combination of events which culminated in the serious injury suffered by Salem were "highly unusual".
He added; "This is not, and should not be seen as, a case about the level of violence which a householder may lawfully and justifiably use on a burglar.
"It is also clear that the violence to which Salem was subjected was not designed to ensure that he was detained and somehow kept pending the arrival of the police to be handed to them.
"So far as both these appellants was concerned the purpose of their violence was revenge - to teach at least one of the burglars a lesson... such violence is not lawful and no one at the trial suggested that it was."
