I agree with @RebeccaBoyd , I would tie it off with some dental floss, then remove the excess tissue, as long as there are not intestines involved then it should heal up. There is a possibility that it will dry up on it's own, but as it is dragging it would just be a danger of doing further damage.Took a damp rag to get off what appeared to be simple poopy butt. It was not poopy butt, its got tissue of so sort hanging off of it now and a bit of blood.
The chick is currently in my clean incubator as it is warm in there.
Do I need to cull? Is this chick doomed or will it somehow heal?
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Has the wee one pooped yet? Check to make sure it has pooped.
Good luck - I will check in later on.