I think you guys got it all wrong. First of all, the baby does get killed (you kill it, it's just not being actually shown how you stab it with the knife, because it would be too graphic and stuff).
Too graphic after seeing orcs turn into fountains of blood? <img src="/ubbthreads/images/graemlins/tongue.gif" alt="" />
I think the child survives. Perhaps the Divine One wants to raise the Lord of Chaos in a nurturing environment and make it a good Lord of Chaos. Reality, of course, will have other plans. Someone from above the Black Ring will come and claim the child to quickly corrupt it.