Sounds to me like you're doing pretty well, there.
I wouldn't put too much stock in his sorrowful statements about his "mistakes." Sounds to me like he's drumming up sympathy from the kids. If I were you, I'd just stay very noncommittal with your daughter. You could say, "I really hope he gets better, but I'm in a much better place now, and if he does get better then he will be, too."