Amanda,
Just take it day by day. Is fighting worth it? No. Is the child worth it? Yes, any child is worth it. So what do you do? Don't fight! Your husband can pursue visitation/custody through legal channels and you can do your best to be the best step-mom you can be to this child.
I have a very close r with my 22 y o step-d (not an OC) today and I do not believe I would trade it for anything in the world. She has been part of my life and I have loved her like my own since she was under 2 years old.
Sadly, I have not meet my two other alleged step-children, now ages 17 & 10 (OC by the same OW, my d-day was Aug 05). My h has no interest in pursuing any legal visitation contact and the OW is a mess, she doesnt have a drug or alcohol problem that I know of but she certainly does have some psychological/emotional problems. Had I been in the 17 year old girl's life from an early age, I believe I could have made a difference in her life, now it will probably be well into adulthood if ever if she ever does recognize that her mother's battle is not hers to fight and she bears no responsibility for her sin and life. The girl is really mixed up and holds animosity against me---a person she has never met---the sense of right/wrong, respect, decency, honesty, integrity, etc... are all skewed in her life view.
I was pro-contact (actually still am) from the beginning because in addition to my 22 year old step-d from my h's first marriage, we have a 15 year old COM daughter.
I know it is hard but I think it is critical to seperate the child from the mother in your mind.
I believe if there is going to be contact it should be initiated as soon as possible when the child is too young to really know what is going on. And hopefully, by the time the child is older, the OW will have matured and there will be less conflict and drama all the time. No guarantee, starting contact at a later age may be more difficult to accomplish.
Demanding you be included in any contact is a very good decision your husband has made.
Focus on yourself and your marriage and any children you have now, and let the attorneys do all the work in regard to the OW. Don't allow yourself to get stressed and caught up in any nonsense the OW throws out, because she will create as much drama as she can.
God Bless You
Ann