Yes, it's rotten. But don't fall into the trap of "horribilizing" either. S2 will have your stepsister's S1 to grow up with - and in some ways, cousin relationships can be close and less difficult than sibling relationships. You might end up with a man who has kids the same age and S2 will have siblings. not blood, but blood siblings are no guarantee of compatibility anyway. You could choose to have a second child if you wished to any number of ways. And there's nothing at all wrong with being an only child. You can surround yourself with "chosen family" who have kids the same age.
Yes, your ex's actions have a ripple effect. But you are also fortunate to have gotten out of this relationship with what you have, and to no longer be under his gaslighting spell. Your life is going to be so much better going forward without him.