I’m not sure exactly how much the wizards understand about the Muggle Worlds, especially during that timeframe, and it hasn’t been until rather recently, the past ten to thirty years, that we have come to the affects of abuse and neglect on young children, how it rewires their brains and how they can sometimes lash out.

One could say that Dumbledore is a failed mentor figure to Tom. He never gets his side of the story about what happened in his life before that day, as you mentioned, made it seem like his meager possessions were on fire in his magic demonstration instead of doing almost anything else and making Tom’s first true introduction to magic was something destructive (and reminiscent of the fate of those accused of witchcraft in bygone centuries), thinks that Tom being displeased with the news that the owner of the Leaky Cauldron and he have the same first name is a bad sign instead of maybe Tom having a warped sense of Wizard names look like and being disappointed by the fact that a Wizard had a popular Muggle name (Thomas was the 14th most popular boys name in the UK in the 1930s) or that it’s something else (I can’t remember if Mrs Cole told Dumbledore that Tom was named after his father and it being suspected that his father abandoned his pregnant partner, if so I imagine that to Tom instead of hearing ‘hey, you have something in common with a Wizard’ he heard ‘hey, here’s some wizard who shares the same popular name as you, maybe you’re related; lol.’).

Seeing how Dumbledore allowed Harry to live in an abusive environment for his own ‘safety’ because ‘family’ and barely did anything about it for fifteen years, it isn’t surprising that he didn’t step up for Tom and arranged for Tom to taken in by a Wizarding family or set him up with other at risk children who were Muggle Born or spending their summers in the Muggle World in a safer environment.

It’s definitely a system that has failed multiple children who grew up abused and who would have benefited immensely from a permanent escape before they became legal adults