Well, I can say with 100% certainty that this is not a genetic deformity. I agree with Star, the fish should have been culled. But to each thier own. I seldom post about issues with Angel fish breeding as I am a discus breeder and have not ventured into breeding angels, but thier does exist some common ground between the two.
First of all this condition was caused at a very young age, probably within a week of hatching and most likely within a day or two. It was caused by a bacterial/protozoan infection that actually ate in to the soft tissue and retarded the developement of the hard rays and front dorsal area. It is an issue that mainly arrises with fish that lay eggs on a slate/cone and have a wiggler stage. I have seen plenty of pictures of discus with the same issue.
When you begin to look at the fish as not an interesting mutant, but rather a fish that has been scarred for life, it begins to loose some of its percieved beauty. It can however be used to breed if the OP chooses too, but be aware that this is not a genetic issue and the fish will have normal looking offspring.
Rick