No, this is not okay. His behavior with the 17 year old is inappropriate. Even if he's truly innocent and intending no harm ( which I have doubts), he should have the awareness to refer her to someone that can help her.
He has obviously made missteps in the handling of his two daughters, what leads you to believe he's using this girl to right his wrongs? Would it not be better if he's trying to atone for his failures with his own daughters by trying very hard to be part of their lives? Is he even trying? Is he trying to better himself so that maybe his kids will want to be a part of his life?

I agree with the poster above regarding talking to this girl's mom. That needs to happen.

Seahound