Olivia the Jude thing first popped up as important because Jack said he was reading it on the night of the murder - the book was his only alibi. That then gives us three references to the book - Jack bringing it up, the fact that Jude comes from Wessex (and Broadchurch is set in the same area) and DI Alec HARDY. From there, it's all about interpretation - and Hardy enthusiasts please bear with me while I paraphrase and shortcut with abandon.
In the book, the protagonist, Jude, enters into a bad marriage. The woman dumps him after a couple of years so Jude moves away and eventually enters into another relationship with his cousin, who also had been unhappily married. They have two children of their own and take in another child - from Jude's first relationship (of whose existence he had not been aware). The family's situation is bleak; when landlords and employers find out the truth (they are unmarried/incestuous), they sack Jude/turf the family out of their home. The oldest child believes that the problem is that there are too many children, so he kills his younger siblings and then himself. Jude's cousin/partner is pregnant, and miscarries because of the shock and grief.
There is a sense that the oldest child was always going to be disturbed because he came from an unhappy and ill-starred union. That he would come to murder and commit suicide was inevitable.
If we take elements of that plot across to Broadchurch, you can see a child murder, a suicide (albeit the suicide we know of was not that of Danny's killer), a mother of 2 children pregnant with a third. In the counselling session with Paul, Mark talks about Beth being so full of life when they met, which is very like Sue (Jude's cousin) when they first meet, until circumstances grind them down.
So if we take the family as broadly similar, who is the cuckoo, the additional child in the mix? To me, that is Nige. He is not just Mark's junior/work colleague, he is part of the family. Involved in birthday parties for Danny, coming around often to help cook and clean. Perhaps a boy who lost his adoptive dad as well as his real dad and looking for a father figure.
To me, the plot shows Nige as the bad blood baby (now we know about his real parentage) so I would not be surprised if he is the killer - it would fit with Thomas Hardy's views on fate.
In terms of the killer, he has the opportunity - Danny is happy to meet him at all hours. He's big, with big hands. He knew where the boat was. He is not adverse to illegal activity. He has a temper. He loves the family sufficiently that he would make sure they had Danny's body to grieve rather than burning it in the boat or just dumping it at sea. He would not even dump it over a cliff - as that would leave a mangled, broken corpse. No, he cared about Danny and so I think this was a killing in a fit of rage or panic.
It just fits, especially if you take some of the themes in Jude as a clue.