Good continuation. Only 2 complaints.
1) Why give Dumbledore essentially a pass for his role in Harry's suffering and death? Why does damn-near everyone always seem to want to give Dumbledore a pass for his atrocities? In this case resulting in the homicide of a boy by the people he placed that boy with after KIDNAPPING that boy from his legal guardian.
Go back and re-read the events where Hagrid REFUSES to give Harry to Sirius "on Dumbledore's orders" that he go to the Dursleys instead. Dumbledore KIDNAPPED Harry from his rightful and legal guardian and then put him KNOWINGLY into an abusive home - both in canon and your story.
So why does he walk free only having lost his political position and Headmaster of the school? He kidnapped and indirectly MURDERED the BWL - intentional or not, Harry's death was a result of Dumbledore's ILLEGAL actions/activities. I can't see the wizarding world not wanting his head on a pike in Diagon Alley regardless of his past heroics.
In a way the Dursleys were less responsible than Dumbledore. Dumbledore was well aware of the animosity between Petunia and Lily per canon and thus KNEW how Harry would be received as fully evidenced by his own admissions in the later books.
Dumbledore was Chief Warlock (Chief Judge) who kidnapped and gave custody of a magical child to KNOWN magic-haters. You showed that he received reports of abuse from Arabella Figg and ignored them.
So please explain why the bastard's head isn't on that aforementioned pike.
It was every bit like a judge giving custody of a black child to a member of the Klu Klux Klan to raise.
2) No real consequences shown for the rest of the world that enabled and allowed this to happen. More than just the Dursleys were responsible but only they were shown to have paid any consequences. There is NO DOUBT this would have inflamed the wizarding populace against muggles. I can't see ANYONE giving a damn what Voldemort and the Pure-blood bigots want to do to muggles anymore after that atrocity against an innocent little wizard child-hero. After all, muggles are considered by most wizards/witches to be beneath them.
Can you imagine if it was a house-elf that murdered the BWL? Muggles are seen as barely above them by most wizards and witches depicted by JKR.
At the very least I would have expected wizard/witch backlash enough to have razed the entire neighborhood surrounding 4 Privet Drive.
Dumbledore did not receive a 'get out of jail, free' card. His power, is based almost entirely on his political positions. He has lost them all. His machinations have been made public, and he's been effectively neutered. For someone who moves things from the shadows, a spotlight is the worst thing for him.
The biggest problem here, is that most of the Wizarding population if Britain, honestly believes Dumbledore is Merlin reincarnated. He has taught, trained or otherwise shaped nearly every single British witch or wizard below the age of one hundred.
Having been a police officer, I am well aware of the many crimes Dumbledore has committed in canon. In fact, those very issues are the basis of several of my as-yet, unposted stories.
As for the British wizards wanting His head on a pike, (I really like that idea!) Dumbledore is, as was Pinochet, legally untouchable. He has protected himself too well and for far too long, for anybody to actually take him to task. Removing him from all his positions of influence is, unfortunately, the worst thing they can do to him.
You will note in canon, he only actually placed Harry on the doorstep himself. Each of his other actions was done through a proxy. Nothing can be traced directly to him. "Hagrid must have misinterpreted my instructions. I merely wanted him to check on the house, to ensure the Potters were safe." or "I don't know what Arabella is talking about. She never approached me with any concerns about Harry."
Who are they going to believe? A squib? A half-giant? Not over the word of Albus too-many-names Dumbledore, greatest wizard of his mind.
On the other hand, Dumbledore will be needed when the much weaker Voldemort does make his appearance.
While I have addressed the issue of backlash, in Madam Bones' warning through the Prophet article, You are correct. there would be a sizable lashing out at the muggles. The bigotry of the wizarding world is so ingrained, the culture is built around it. Muggles, house elves, goblins and 'other creatures' are at the bottom, with mugglebornes just one step above them. Then come half-bloods, and fullbloods (those with two magical parents but without the long pedigree of the purebloods.) and the inbreds, who stand alone at the top.
To declare war against the muggles would be both stupid and well in character of the wizards. I'd imagine the threat of severe reprisals by the ministry, that Bones made will cause cooler heads to prevail...hopefully.
Thank you for your thorough review. Much better than 'Loved it, want more!" or "Hated it, it sucked!"