Thanks to all for your feedback (even the harsh stuff, I know I need a thump on the head sometimes).
I've been pushing him to truth up and get real with her, and for all 3 of us to meet. He DOES say he's working on it, and I believe him. She asked him yesterday, "You and Carma sleep together, don't you?" And she must have asked it mildly and gently enough that he felt safe to say "yes." So that was a good step.
What I'm finding is, he may not want to continue his relationship with her. She is pretty flighty and scattered, and has a boyfriend herself. At first it seemed she was only with the bf for his MONEY, but come to find out, she is kind of hung up on the guy, after all. (He is old and very rich -- and VERY non-commital to her. Treats her like crap, actually. Sundance has been a huge contrast to the way she's been treated. In that regard I feel immense sympathy for her and I could be her friend). Sundance is seeing things about her he didn't know at first, like she drinks A LOT. At this point I think he is considering that he may want to bow out slowly without decimating her. (And yes, like Anna said, he may fear the "woman scorned" reaction).
You are all so right -- fear has been BLINDING me these past few weeks. I feel it has lifted today. What a roller coaster. I am definitely a perfectionist, who thinks if I just do everything perfectly, I can avoid all bad consequences of life and love, ha! (You mean I DON'T have to be Super Poly Woman, SourG??)
We definitely have some work to do, and this has been a learning experience, sometimes an excruciating one. I know Sundance is not perfect, and he is not always making the best decisions in this, but he definitely does not want us to break up, I know that for certain. He IS trying, and he is open to conversation, we talk all the time. I appreciate the insights and perspectives I get here, so much. It really helps me, especially when I'm on over-analyze paranoia mode. Or -- delusional (Neon) -- so thanks, all of you.