Two questions - does she know you did the DNA test? I can't tell from your post. Also, what age is she?
My feeling, when I read this was - the man she considers dad is toxic and abusive. I think boundaries in place regardless and ending contact for a while is a good thing. Can you not do that regardless? I should think that would be a good move. He is not a positive presence in her life.
A friend of mine divorced a man who was an alcoholic and not a positive influence in their lives, and when he continued to drink - she kept reducing his time spent with them. I think you can do this regardless of whether she knows or not.
As far as telling her - I would think it would be like telling a child they are adopted, or any kind of life altering news. It's not like you've been keeping a secret from her. You didn't know in this case. It will affect her permanently. I was dealt some life shattering news as a child (illness of a parent) and it deeply changed me. I like the suggestion of having an outlet for your child - to talk and be heard, because honestly, I think that's key. She just needs a safety net and a place to get it all out - that's not you. You'll be too involved, too close to her, and too concerned.
Counseling is not just to have someone who knows the answers. It's so individual. You have no idea how the news will affect her. Everyone reacts differently. What will be important is that you are constant and there for her as she goes through the pain of it. She'll recover - it just takes time. Time and love. But having someone else (not involved) to talk to - key. I had that.
Good advice below on getting advice on how to proceed. I think in the end it will all be ok. He may be very angry (your ex) so take measures to protect yourselves.