Try to step into your son's shoes for a second. He's looking for a change of place. Your place is comfortable, but it's also the same day in and day out.
Here comes friend with baby. New place! The fact that his father is encouraging this is gravy. He wants to reconnect with dad. This is something to talk about! Yay! Look, a brand new shiny future. Just like a brand new shiny car.
My take, this has NOTHING to do with you. It's not you vs. ex at this moment, and it is in your best interests if it doesn't turn into that. It has everything to do with his desire for something different, even if that "different" is less stable than what he has now. Honestly, even I can see the appeal. When I was his age, the last person I wanted to hang out with was my mother.
My parents gave me plenty of advice- some of it was very good. Some of it was VERY bad (Ex: US universities don't consider extracurricular activities when making admissions decisions.). In the end, it was totally up to me to decide what advice to follow and what advice to reject.
And it's the same deal with your son. He will have to become his own person and figure out life on his own terms. I see my own teenage son make his own mistakes, and more often than not, I find that I cannot step in and clean things up.
And in the end, all we can do is step back and watch.