Billy's crying is real. The director asked Justin Henry to think of a saddening memory before the take. Reportedly, at the Golden Globe Awards in 1980, when Ricky Schroder won the Best New Male Star of the Year award, according to the book 'The Academy Awards: The Complete Unofficial History', Henry "threw a raging tantrum".
When Justin Henry was Oscar nominated for the Best Supporting Actor Academy Award, Henry at age 8 became the youngest ever person to be nominated for this award as well as the youngest ever Oscar nominee in any category, a record which still stands today [August 2012].
Dustin Hoffman pours raw egg & milk mixture into the pan while making the french toast. Later the pan contents burn. The close-up shows it all as browning. After that close-up Hoffman drops the pan on the floor. The egg and milk mixture flies out, and it is raw again.
Joanna Kramer wins custody of Billy. However, when she comes to pick him up, she tells Ted she decided to let him keep Billy. A teary Joanna goes up to see Billy, as Ted tells her she looks "terrific".