I loved this! I liked your use of language, and the premise (with Teddy and James) was so unexpected and tragic. I'm so glad that Harry visits James in Azkaban and is making plans for his re-entry into society. The world you set up, with a disgraced Harry, appalled society, newly discovered Snape, and James getting out soon with lots of Issues to deal with, is really inviting of further exploration. I didn't want the story to end, because Harry's solutions seemed feasible but still fraught with difficulties and I was so curious to see how James's exit and relations with the Weasleys/wizarding world would become complicated and resolve themselves. In fact, I would love to read a novella that starts with this depiction of Harry and Snape meeting...
You had a few turns of phrase that made me smile or that just felt right. One was "I could call the Prophet and tell them you've returned as the Cerne Abbas giant..." Ha!