Goodmom,
What an incredible Christmas story.  You have a generous heart to have taken this child into your home.  I speak from experience because I've had custody of my Grandaughter since she was 5 months old.  She turned 9 in August.  I pray this little girl will be allowed to remain in your care.  However, be prepared for anything! 

My concerns would be; if you threaten the Dad, he may very well come and pick the little girl up. (leaving her broken hearted; and your family feeling defeated)  Where is the child's mother?  Is she part of her life? 

I would be tempted to lay low and let the Dad "think" he is in control.  The dental issues can wait until you know for certain what the outcome will be.  I would still seek legal advice or even call the Department of Human Resources (you don't have to give them your name) to see what options you have.  I think that if you back the Dad in a corner, he will take his child and run.  You do not want this to happen.

Praying for things to work out for that little girl!

God bless.

Kathy as Cmom