I really appreciate all of your thoughts so far.
I had felt like this was a complicated situation in which no quick decision should be made, and reading all these posts makes me feel like I'm not crazy for thinking that. lol
As far as saying 'goodbye' to my extended family if they drew a line in the sand... that's really no problem. I'm sure that sounds callous but believe me when I tell you I've literally done it before for over 2 years. If not for an unexpected situation that evolved with a good result, I still wouldn't have contact with them. I'm pretty hard headed and am non-emotional towards them now so if they are out of my life I could deal with it fine. If my parents didn't accept ALL of my children regardless of their biological parentage then I would not allow contact with any of them... no problem there.
Truly my concerns lie with the child. Is it better for a child to think no one in its birth family cared or wanted it for racial reasons (no matter what I would say in 20 yrs deeds speak louder than words)..? Or to know it was kept by some of the birth family and have to deal regularly with knowing that much of the rest of the family doesn't want them? Do you think perhaps the child's gender could play a role in how hard this hits them?
*still sighing* My husband just keeps saying, "that poor baby. It will have to go thru all of that 'what am I and where do I fit" stuff." ...I wish my sister would just USE the birth control that's been given to her!