Speaking not as an attorney, but from my own personal experience:
CPS does not outrank a judge. There are legal limits on what they can do. When my son had a breakdown at his school he disclosed abuse by his father to his teacher. I had seen the big goose egg on my son's head, but was convinced by his cover story that he fell out of a tree he often climbed. Thank God that the teacher, as mandated by law called CPS. CPS then called me to set up an interview with my son. There was no eyewitness to what had happened. By the time my son told the teacher, and everything was set in motion, and the interview happened there were no marks or bruises to show. In the end, even though they 100% believed my son, they couldn't substantiate the allegation. However, our case worker really fought for us. She got them to leave the case open for 6 months and provide my son counseling. One, that let our abuser know that things were being monitored, and forced him to back off. Two, my case worker and the counselor have now both said that if anything happens again I can go to court and they will testify for me. It's very probable that the case worker in this case did all that she could.
I do have to wonder why the judge did not make use of a supervised visitation center. Washington state has plenty of them:
http://www.svdirectory.com/state.htm?st=wa
Or why the judge would not have suspended visitation pending a psychological exam of both the father, the children, and the prospective custodians. The courts must balance the sacred right of a parent to raise their own child with the sacred right of a child to life and safety. It's not an easy task, but there is a lot of scientific research and old fashioned common sense that can be used to make a responsible informed decision.
Believe it or not, only ten years ago, many states still did not have laws requiring judges to even consider family violence as one of the factors in determining child custody. Today, some states require it only if there has been a conviction, so a victim who is coming forward for the first time, or in a case like this where the victim is deceased and cannot speak, that doesn't help much. Today, many judges still don't understand the strong correlation between spousal abuse and child abuse. Many judges hold the belief that just because someone abuses their spouse it doesn't mean they will abuse their children. While this is technically true, and there are cases where that doesn't happen, it does happen often enough that it's irresponsible not to do a thorough risk assessment, and enact the appropriate safeguards when the potential for violence is so great.