I would imagine Facebook keeps placeholders for people you know that are not on Facebook. His father had made a contact with one of the relatives not on FB but with the other name. Perhaps the great aunt had him in her contacts as well. A name and/or phone number can represent a person in the graph without being a FB user. Why they made a suggestion so many degrees away is a little curious, but I think they mix those in with the more obvious ones just to check.

TL;DR: I think their graph includes non-FB-using people.