Hi there, foster carer here. Apologies that I haven't read everything but I just wanted to give some pointers.
Your living arrangements seem difficult and I am really sorry you are going through this but just some perspective on the realities.
If your DN gets removed from his mum, do not let your DP accept him under a situation where he is just "living with his uncle" because what will happen is all help will become unavailable. If he is taking DN in, make sure he says he wants to be approved as a foster carer or kinship carer to at least get some support should things go wrong and also some financial support whether he thinks he will need it or not. Social services will not let him change to this down the line, it needs to be set up from the get go.
SS would allow DN to sleep on the sofa but it is not a good solution. Kids, especially neglected need their own space.
School will be a must. All children under a care order are required to be in full time education and I would start now before he gets to high school age.
Children who have lived with neglect and trauma come with challenges you can't always prepare for. They need more love and nurture than you can imagine and sometimes it is hard but perseverance is what is needed to come out the other side. I think a lack of personal space would make this difficult. Just something to think about.
See if DN can be enrolled in therapy to help him through the emotions he will be feeling and to hopefully learn coping strategies. This can be arranged through SS.
Your DP could absolutely be able to keep a bond with DN if he lived with a foster carer. It will be decided if contact would be supervised or unsupervised and go from there. You can build up a good relationship with the carer to keep up to date with DN and even provide respite and have DN for weekends and holidays when you/ DP can. This could be written into his care plan. There are many positive birth family / foster carer relationship, you just dont hear about them as much as the negative.
It is a massive commitment and I understand why your DP wants to do this and why you are hesitant. However, if he is going ahead I cannot tell you how to live but I would urge you to make sure DN is taken in under a fostering rather than "private" arrangement as DN and yourselves will be open to more support. Many carers who are in private arrangements are left to fend for themselves often without the help, support and skills they need and should get.