I have seen the bracing done alot on foals with tendon/ligament deformaties, it helps keep the leg from bowing in or out while growing and yes, it does straighten the legs. But, I would worry about this one, the bone is deformed, not the tendons/ligaments. It reminds me of bowed legs on Basset Hounds, sometimes they get so deformed that a vet can go in a break the bone and straighten it out.But, I would think that would no be possible on a foal.
You can see the deformity in the leg bone, its not a weak fetlock. Alot of the ability of him to be a riding horse I think will depend on how the leg grows and if the growth plates will be effected by the bend in the bone as he grows and puts on weight and muscle, if they are effected it could grow less or more than the other leg.
If this was my foal and I wanted to try to make him a riding horse, I think I would take him to an orthopedic specialist and have xrays done and see what the bone looks like and if it could be corrected at this young age.