Should George and Ann be justified or condemned for having cut off all relations with their father for so long because they believed he was guilty?

It is more complicated than Ann and George just believing that their father was guilty of the crime. Ann and George turn from their father out of a sense of shame.  Their family was destroyed by the scandal, their parents separated, they had to move out of the neighborhood they loved.  They were very angry at their father for ruining their lives.  So I understand why they turned away from him. 

In view of the fact that before the faulty airplane parts scandal which led to the jailing of both Joe and Steve, all these people were very close.  They lived near each other, spent their lives growing up side by side and shared a similar understanding of morality.  When Joe Keller turns and blames Steve Deever, exclusively, for the faulty airplane parts, Ann and George are shocked that their father would behave in such an unethical, criminal way.

Joe Keller is a strong personality, he is very convincing as the unknowing victim in the situation.  He is released from prison, and once he is free, he makes sure that everyone, all the neighbors, his family,  know that he feels pity for Steve, after all, he wasn't in the factory the day that Steve made the decision.

 However, it is shortsighted of them to think that their father was capable of making such an important decision.  The factory belonged to Joe Keller, he was the boss.  When George finally goes to talk to his father, he learns the truth.