The allegations came from that one odd-looking alien playing dabo in Quark's bar and we never learn his motivations. Rugal's adoptive father vehemently denied them and before anyone says, "well, he would if they're true" , Rugal's behaviour showed where the truth lay very eloquently - he ran to Proka embracing him and was visibly distressed when it looked as though they were going to be seperated. That's not how you react to someone who's mistreated you.
Actually there are a ton of children in abusive families who would probably have a hard time ever leaving them, just because it's all they know, and because they've come to think of the abuse as "normal" or "deserved." It's possible Rugal was in one of those (and I have to admit his Bajoran father didn't exactly seem like the
nicest fellow).
Still, on the face of it I have to agree Sisko's decision seems to be the wrong one. Without
any actual proof of abuse, I would think you'd have to err on the side of letting the kid stay where he wants.
Although to be fair... we've also seen real world cases where a kid was stolen from their mother at a young age and then returned years later. Regardless of how attached the kid becomes to this other family, the parent STILL deserves to have their kid back.