Step-parent adoption is WI - Pls Help

Here is my dilemma. My daughter, Isabelle, was born (out of wedlock) in Feb. 2002. Her biological father (with whom I had already split from two weeks prior to finding out I was pregnant) did not show up at the hospital to sign any of the papers. Prior to the birth, I told him that if he did not show up, I would list the father as unknownӔ on the birth certificate. He has never requested to be listed on the birth certificate or to sign a voluntary paternity acknowlegement. Since her birth in 2002, her bio father has only seen her approximately 12-15 times. These visits have ONLY been at his mother's home and he has never actually set up any of the visitations. He has never stayed for a visit more that two hours. I deal directly with his mother and father regarding their spending time with Isabelle. He has never helped out financially or any other way, for that matter. He is now married and has had two more children. Last December, at his mother's urging, he called me for the first time since my daughter was 10 days old and said that he was interested in "seeing" Isabelle. When I asked him to tell me exactly what role he wanted to play in her life, he said he wanted to "see her once in a while and maybe take her to Chuckie Cheese". That is verbatium. My gut reaction was to tell him to take a hike, but I beleived that he was all talk and no action, so what I did is sent him a contract that I had drawn up that outlined what he would be responsible for in terms of what her schedule has been and what she was accustomed to - it also included a monthly "support" amount of $100 and a visitation schedule. Within this contract, I suggested that we have it notarized. I mailed it, called to verify he had received it after not hearing from him for six weeks and have not heard from him since - it has been almost a full year. In the last year, I have gotten engaged to a wonderful man who has essentially been Isabelle's only male role-model/father figure. She (at almost five) wants him to be her daddy. We have never urged her or told her that she has to do this or call him DaddyӔ - she wanted to on her own - most likely because she sees his interaction with his daughter and wants that for herself as well and truthfully, who could blame her. My fiance has taken on the role of father and we both would very much like to have him adopt Isabelle once we are married in Nov. 2007. I have searched on the web for hours at a time and it it looks like the state of WI requires my ex's permission via Termination of Parental Rights for her to be adopted. We went to a consultation with a local lawyer who said it will cost approximately $5,500 to complete the adoption (if it is not contested) because of the home study (which sounds crazy to me, since I have always had custody of her), the guardian ad liedum (sp?), court costs and lawyer fees. Since my ex has ZERO legal rights because paternity was never established, he is not listed on her birth certificate and has never had visitation or paid child support, do I really need to spend $5,500 to prove that he has ZERO legal rights to her? Also, if he contests, our adoption could be blocked and he could file for visitation, correct? I fear this very much so much, in fact that we thought about just changing Isabelle's last name, but we need my ex's permission for that as well, plus, I want my fiance to legally be her father because I feel she deserves that, at the very least. Any help would be greatly appreciated. Thank you.