I really don't get the whole "you're continuing tradition by giving your baby DHs surname" argument. I'd assume baby would have DHs surname if OP agreed to take his name upon marriage, which would be her choice and nothing to do with the current issue. It would be weird to give the baby a different surname if they all had DHs, and quite frankly, if that were a tradition OP was happy to follow I see no difference here. Many women are no longer taking DH surnames upon marriage, so if names actually meant something it wouldn't be unusual.
This is about OP not liking the name, regardless of the tradition attached, as she has said herself.
She may not like the name but if it means something to her DH I'd just have it as a middle name. I'm not sure about use of middle names down south, but unless I need to fill out a form requiring my full name the only time my own middle name is used is on my drivers license. No other communication uses it, school/dr/dentist/work. The same applies to my DS - he is registered with his middle name known but is only referred to as firstname surname.
Middle names aren't used in every day life and, unless baby told others his name, I can't see it being open to ridicule.
Both parents should get a say, but I'd be less likely to care about/veto a middle name with importance to my partner than a first.