OK this might be long:
OP, my very good close friend, is now a single mum. Her ex is serving a long sentence for abuse of a child who used to visit their home. My friend was distraught, she knew nothing and felt responsible for child's well being. One thing he said to her was 'I never touched OUR kids'
I knew her ex well. Had known him for years. We stayed at their house. They looked like a normal family (she thought they were) You can't spot a peadophile by how they look, many are family men. All may be well at this man's home. He may be a good dad. My friends ex was a great dad, he loved kids. That doesn't mean he may not also be a peadophile.
I have been reading other threads recently about doing the 'stranger danger' talk with our kids. There is a great website which gives 10 things you should teach your child. One of them is to trust your feeling that something isn't right. As adults we often let that feeling be drowned under our social conscience (I don't want to make a fuss) etc. If we are teaching our kids to trust their gut feeling, how much more must we as parents trust our gut feelings.
We have one dad at the school gate who I don't trust. He is nice, chatty and is nice and friendly with all the kids. My kids love him because he is a joker and messes around with them (not physical, mostly tells them funny jokes). My kids and his kids are friends. We have had playdates, always at my house. I can't put my finger on what I don't trust. I may be doing the poor guy a disservice, but there is something, and I am going with that, so my dcs will never be alone with him.
I find what you are describing very inappropriate. I am very slow to use strong language on mn but this is outrageous. He may be genuine and stupid and he may be a peodophile. But you need to go with your gut instinct.
I think how you approach it depends on you and how bold you are. I think I would say to him - can I have a word? and then after you have dropped off kids (no eavesdropping) I would say simply, look I am sure it is entirely innocent, but the way you are interacting with my dd is not appropriate. Please don't kiss her on the lips, kiss her on the legs or even pick her up and hug her like that. Those are things that should only be done by family. It isn't appropriate in playground, or between you and my dd. It doesn't matter what his reaction is. Just smile and say well, she is my dd and that is what dh and I have decided. If he is genuine and stupid that should stop him in his tracks (he will be mortified) If he has ill intent he may make a fuss. Just walk away.
Then I would tell dd that kisses like that are for family and that it isn't going to happen at school. No need to tell her he is a 'bad man' in any way. Instead talk to her about her body being hers and if she doesn't like what someone is doing then she can say so and you will tell them no for her.
If he tries to continue, pick up dd yourself and say, please don't touch my daughter again, or I will have to take action (wouldn't mention police in dd hearing)
Do tell the school. My friends ex could have had an enhanced CRB. His record was squeaky clean, he looked like the perfect parent helper, how nice to have a dad who can come in to school etc.
It is not enough to stop it (by keeping dd away from him) you need to tell him too.