Well I honestly don't see a problem with that if the girl is dating him because she likes him for his personality and he treats her right. And honestly, some girls aren't so fixated on only dating attractive men (though there are plenty who are). There are attractive men with girls who people would debate to be considered as less attractive than the guy they are with. And again there is no problem with that if they are dating for personality and how well they treat each other.
Pretty girls want to avoid stereotypes. For me, I just talk to all kinds of guys. The popular, funny, sweet, smart, and unpopular ones. I try to find the good qualities in guys. Lots of the hot and popular guys are too busy with their friends and their games to make time for me. Lots of them are jerks. Yes, it does make us feel confident, but we don't use an "ugly"guy just to feel confident. There needs to be a feeling there already. Plus, these guys get all cute and jealous if a "hot" guy comes around.
"Hot" guys don't feel threatened because they feel there is no competition. They feel they're better than all of the other guys, and can get any girl they want. We don't need guys like that in our life. If you're attractive, and you find it unfair that the girl you like likes someone else who's "worse" than you, be sweet. Talk to her. Flirt a little bit. Make her feel special. Be confident and just overly sweet, even if you're embarrassed your friends will see. Show her, you can be all the things this "ugly" guy can be. Make time for her!