Lily would have been a great mother, because (as we have seen) she's quite clear on what kind of man James is/was, and she's always loathed bullies. But she stands up for herself and the defenseless.

And after seeing Snape's memories in the last book, I couldn't have written Lily in any other way. She and Petunia just never had a chance to deal with their issues.

And as we saw in DH, Dudley is a real human being under all that crap his parents pushed on him. Pushing the comical relief aside, any child can be raised to be a descent human being, it's just a matter of civilizing the little brutes ;)