That's what it's supposed to do.

It's clearly meant to be the child that Ellen Ripley would have had if she had lived, made into a monster by being born out of the merging of the Alien and Ripley.

Originally it was meant to have a mixture of male and female genitals too (I wish they had kept it because it's truly and appropriately horrid).

The bit with it being pulled inside out is really nasty, the poor mixed up mess of a thing.

The problem I have with Alien 4 is the humor which is completely wrong for the film, it throws the tone completely off.

I think because a lot of people didn't like the bleakness of Alien 3 they took a giant step in the wrong direction.

I don't have a problem with the bleakness of Alien 3 it's the ham-fisted way they slammed Vincent Ward's original idea into the prison planet idea that I don't like (they should have gone for one or the other but in the end they screwed up both). Then they compounded the issue by slicing the film to bits so it made even less sense, it's amazing how coherent is was even after all that.