To answer the question of cruelty, I briefly looked up the definition of the word "cruel." The first entry I found read: "willingly or knowingly causing harm to others." Indeed, then, it is crueler to let the child live, for it will live out its life with the great pain of crooked joints, and we know of no definite pain that will come after death. Thus it is certainly crueler to let the misshapen ones live.
Now, is it better or worse? The pain these misshapen ones go through may indeed teach them to be stronger. Indeed, we must be aware that Nietzsche puts the murderous words, the claim that it is crueler to let it live, in the mouth of a priest! Such a priest, knowing of Nietzsche's fated painful existence, would have opted to kill him as well, do you not think? Some food for thought. :)
[Very lightly edited to enhance readability -TT]