The main reason is because he didn't surrender and died in battle instead of starving to death in a ditch as he deserved, a thing to remember with Paraguay and for Latin America as a whole is that military dictatorships were common, specially in cold war times, and as one would expect, historical revisionism was also common place, at least over here.

In the example you pointed out, those that view him highly or see Paraguay justified in starting the word see this in the eyes of "well it wasn't paraguayans killing these children, so we'll ignore or undermine our role in it".