When you think of the relationship between these two, it almost makes sense that Paulie was “tricked” into fatherhood as Varina’s daughter (can’t remember her name) knew he would care for this baby just like he always did for her.
I also questioned the baby’s paternity. But I think it wouldn’t have mattered. Paulie wasn’t their son/brother but completely a loved family member. Even if it was revealed the baby wasn’t his, he could have raised it because Donatella wasn’t capable of doing so; Paulie always rescued her and would step up for her and the family. Since his family rejected him when he came out, he wasn’t going to let this baby be parentless and grow up with out unconditional love.