First, these four children are a family and since their mothers have been murdered and their father is in prison, it's probably best for them to be together.
That being said, we may think that the apple doesn't fall far from the tree, but do we really know Steve would not be a fit parent? He is married, and if it is shown that his marriage is stable and his wife is willing, perhaps this would be seen as a good home for primary custody.
However, it seems to me that it would be healthy for the children to have contact with their mothers' families. I think this would be especially true for Stacy's children.
I believe that all parties involved - Steve & wife, aunts & uncles, etc., need some serious counseling with regard to putting the children's interests first.
Stacy's children are young enough that they could be settled into a permanent home in a stable environment and probably emerge okay. Kathleen's children have lost two mothers and their father is incarcerated and accused of murdering them. These two boys need to work through a lot.
I pray that the best interests of the children are the primary consideration and that whoever decides this issue will consider every aspect of all possibilities before making a decision.
This man has severely disrupted and darkened many lives, and his actions have forever affected in a negative way the lives of those people forever. Worst of all, he has deprived four of his children the love and satisfaction that only a mother can give. They have an emptiness that can never be filled.