The fatwa you have quoted is by a Hanafi scholar.
The view of the Shi'a Imami scholars is that:
As you rightly say, such an act is not allowed - only sperm from the husband can be used.
However, now that there is a child the following will apply:
1. The child belongs to the real father - in this case the uncle
2. He can be brought up by the husband (brother) as his own child with the permission of the real father.
3. Whatever surname he chooses to use, it is fine as long as the real father is aware of the arrangement - however, he cannot inherit from the husband, except if the husband gives him an allocation of one third of his estate at death, which he has control over.