Relationships shouldn't work with "rewards" and "punishments". It's more about: can you make it work? So here are some questions to help you figure that out.
--Will you be able to be okay with the fact that she slept with her friend? Moving forward, do you think you'll hold it against her, or do you think you're be able to let it go, knowing that long distance relationships are hard and she made a mistake and it's not that big a deal?
--Would you be okay with an arrangement where she explores the possibility of a relationship with you at the same time she's seeing this other fellow? Is that something you feel you could do?
--Are you two going to be able to meet soon?
--Looking into future possibilities, is there a time in the future where you'd be able to live in the same city and be together?