I may be wrong here, but I don’t think that the father of an illegitimate baby would need to be present at the baptism service. The church was keen to know the name of the father and to record it; in the months leading up to the birth, the mother would either have given the father’s name freely, or there’d have been pressure put on her to reveal the father’s name. You ask whether another man could have “stood in” as the father at the service and been recorded in the register --- I think the answer is “no”.
Looking at this with a very big question mark over whether the baby James (JR/S) in this case was your James Radcliffe (JR), or not, the next big “IF” is this: was John Skelly ( labourer of Castletown and father of JR/S bap 17th Aug 1842) the same John Skelly who married Elizabeth Duke in Braddan on 28th April 1842 ? IF he was, then the dates are helpful in imagining a scenario in which John’s relationship with Esther Radcliffe immediately predated (or overlapped) his relationship with Elizabeth Duke. By the time Esther told him that she was pregnant, perhaps he’d already become engaged to be married to Elizabeth. Perhaps the wedding took place in Braddan because although Elizabeth was an Arbory girl, she was working in Douglas. Censuses show that the couple then went back to Castletown where their children were born and raised. In this scenario, would Esther have been resentful about her situation, living in relative poverty close to the father of her child and seeing his growing family ?
The 1851 Castletown census shows the 9yr old nephew of Samuel and Leonora Quine as James Skelly. Another big IF---IF this James Skelly was JR/S b 1842, the choice of the surname given to the census official would be the decision of Samuel Quine, and he would know that the legal name of the child was James Skelly. This is just one snapshot in the life of this child. He may have gone through life resenting his father and, when he was old enough, choosing to be James Radcliffe.
Lots of IFs there, and no way of knowing whether JR/S was your JR.
On the subject of DNA comparisons, it’s not inconceivable that there are (so far) no descendants of this particular Skelly line who have undergone DNA testing. I’ve done some rough counting of particular surnames in the 1841 census index and found: Corlett 1100, Radcliffe 450 and Skelly 90--- so there weren’t many Skelly folk compared with other names. I wonder whether the tree owner of “Gill Family Tree” has done a test / could be persuaded to do one ?