As a dad I would be straight up pissed off with such a comment. It isn't gross or anything else. He's a dad holding his daughter, his NEW daughter, let the man bond for Christ sake.
As for boundaries, we aren't talking about a twenty-something girl at a bar, we are talking about a dad and his seven month old daughter. How would you like it if he suggested you keep a newborn son away from your breasts because it crosses a gender boundary?