Kite him. This involves getting to a safe range, firing at him, reloading, and then running away again.
When his hook is set on fire, it becomes doubly important to stay at range.
He will become stunned at times, dropping to one knee. This is the best opportunity to use explosives to their greatest potential. However, one must be fast, as the Butcher will likely move out of the blast zone.
Don't waste time with Fire Bombs, as he is immune to fire damage.