Good for you for wanting to give a horse in that situation a chance! It sounds like a very hard situation, I would have a vet check the issue and see if it is something that he can be comfortable with as a pasture ornament or not. You don't want to have to watch him suffer if it is an injury that will cause him daily pain.
A few things to keep in mind- it sounds like he is young and little, as he gets older and heavier, it may change from a pain free issue to one that affects him. Also, an injury like that will be more prone to developing joint disease etc, even if he is just a pasture pet, so to continue to keep him comfortable as he ages you may have to put more and more effort/ $$$ into him.