We have no doubt that Billy Butcher would not be the best father in the world. But there's one simple reason to think he would be the best father for Ryan — Billy Butcher is the only connection Ryan has left to his mother.
Ryan was conceived by Homelander's sexual assault of Becca. With Vought wanting any of Homelander's offspring close at hand, Becca is spirited away to be kept in a controlled, isolated environment and Billy is left to believe she's dead. So even before Becca's death, Ryan's world is made pretty small by Vought. But now the person who has been his only source of emotional support, love, and almost his only source of social contact is gone. To make things unimaginably worse, Ryan is himself the one who unintentionally kills Becca. The last place he belongs is in the care of strangers.
Billy Butcher doesn't know Ryan much better than Grace Mallory or anyone else, but he knew Ryan's mother as well as anybody and better than most. He's the only person left in the world who can provide Ryan with even the thinnest link to Becca. And since Becca was essentially the only good thing in Billy's life, he can relate to Ryan. He may have seen him as nothing more than the spawn of the psychotic Homelander at first, but it's clear Billy's feelings toward him are much more kindred after Becca's death.
Regardless, Ryan's in for a difficult road. But without Billy, it's going to be much more uphill than it needs to be. Let's not forget it's the kind of separation from any true parent figure that Ryan is facing that helped make Homelander the maniac he is today.
