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He's 4th gen and still B :( I would snip - you'll get something better. Maybe mum isn't a high red - I think it's sometimes difficult as we cannot compare mares.
Remember you did the comparison to sire for a reason :)
Just my thoughts though - he is lovely looking :)

I generally take a different approach to these scenarios from Dinascar, so I wouldn't snip him ... yet.

If I breed a stallion that has the genes I'm looking for but doesn't test as high as I'd like, I usually keep that first stallion and use him until I produce a genetically similar stallion that is a better quality. Then I snip the first and add him to the show string and use the second. Sure, he may produce more foals that don't pass BA or SBA but you need show ponies, anyway. Just because he isn't ideal doesn't mean you can't get show ponies you like to look at while you wait for the ideal stallion.

In the end he is good enough as he passed his SBA and it doesn't really matter - depends on your personal goals - are they to get up to great breeding quality in as few generations as possible or to breed horses with certain genes/look. You know whether you want to breed him or not already. Do what makes best sense to you.
PS It is a game :D I think sometimes we forget that!

You’re going to have mare lag no matter what, unless you’re willing to restrict yourself to only the same number of fillies making it through your culling as your stallions. I figure as a mare they will have a lower overall effect on my herd than by keeping an inferior stallion.

I also am breeding ridiculously high numbers of foals a year, so one foal more or less going to the show barn as a snipped baby doesn’t hurt me. If you have a much smaller herd, my methods may not work for you.

A lot of my colts who Paper where I want to but don’t make the comparison cut will become fillies in my herd, especially if they’re consistent and have the genes I want. It really depends on the cohort of foals I get for any one group...

There is no right or wrong here, as you said. I’m just offering a strategy I’ve used before for a colt that didn’t make the cut for my standards. It’s heartbreaking when you get one colt who is all the genes you were hoping for and he’s not quite right and one colt who’s amazing quality and freaking plain as mud...drives me nuts but seems to be the roll of the dice so many times!

Thanks guys I think I am gonna make him a mare.