How does the barbarian girl transform the Magistrate? What does she help him realize that he could not before her arrival?

At the beginning of the novel, the Magistrate is a respected man in his community. He serves an Empire he understands to be generally worthy of his service and loyalty. It is only when Joll brings a group of nomads to the town—including the girl he later takes in—and tortures them brutally for "information," that the Magistrate begins to realize that his Empire is an instrument of evil. This is the first point at which the Magistrate's eyes are opened.
His relationship with the girl, however, whom he finds blind and begging on the street, leads him into a journey of self-analysis which helps him understand the cruelties of the Empire on a far deeper level. At first, he tells himself that he only wants to help the girl and that his offer of help to her, in physically caring for her, is simply an expression of compassion. Slowly, though, he comes to recognize that the power dynamic between them is troubling; the girl is in his power and stays with him in his room at night. When he has fostered sufficient trust between them for her to tell him what the torturers really did to her, the Magistrate is so horrified by the reality of the situation that he runs away from their growing intimacy. For the girl who has already suffered so much, this is simply another form of punishment, and it is inflicted by the one man she has come to trust. In the person of the girl, the Magistrate sees all the horrors of the system he has always served—which he can no longer ignore.
The Magistrate knows that the situation between himself and the girl is untenable and, on some level, immoral, but it is not until he returns her to her people, putting himself in great danger in doing so, that he really understands that it is not only the violent torturers who are the "bad part" of Empire. On the contrary, the dynamic between himself and the girl when he first found her was the result of a huge power imbalance born of the imperial structure—which the Magistrate himself helped prop up. The girl has transformed his understanding of the Empire and helped him recognize his own part in it.