Giveherpeace, Howard has no say on whether Larry gets full custody or not. Larry is the father, Howard is a stranger on her life, someone who committed fraud by knowingly signing himself as the father to take the baby away from her real father.
Period.
Yes, he is being "nice." Maybe he is scared Larry will sue the last Froot of the Looms off his body.
So, don't give him so much credit for his "niceness."
About his sadness, I'm sure he is sad. He may be thinking of all the money he could've made by the death of two people, and all was in vain.
DISCLAIMER: I am in no shape or form implying anything, just giving my opinion on weird facts.
:)