There are two entirely different cases here. Please don't make the mistake of mixing them up and treating one like the other.

If he coerced or forced your daughter into doing something she clearly didn't want (which is not necessarily the case when someone uses the now-worthless word "molested"), and if she hasn't forgiven him and wants him back in her life, then it certainly seems to me that any further involvement with him would be a clear betrayal of your daughter's trust in you. If he did do something without her consent, and she has forgiven him and wants him back in her life, I think that's great so long as he understand he's not to do anything like that again. (Some here would argue against ever forgiving a true molester, but I see no reason to make any distinction between this case and theft, drunk driving, or a hundred other minor matters that can be forgiven if the person regrets his action because he knows it was wrong, and won't do it again.)

On the other hand, if they were doing something they both wanted, then he is as much a victim of unjust laws as your daughter is, and there's nothing to 'forgive' in the first place. In that case, once the injustice of legal action ends (possibly by your daughter refusing to testify against him, which you should encourage and support if you are certain it's her will), you should have no hesitation in having him back in your life, but tell him to be a hell of a lot more careful in the future. It's possible for him to be interested in both you and your daughter, but even if he's only attracted to her, that's no reason for you to interfere or destroy a relationship that they both value.