Thank you for all of the responses.
I have found out this has happened to them before only not as big of scale.
They were close with another swing couple. To the point of almost poly, but not quite.
They all still saw others, together and independent.
The husband started having jealous feelings (found out after the fact) and made work excuses to not see them.
The wife didn't really realize it and just believed hubby really was busy.
It made the other couple pull away, a few months after this, we entered the picture.
His wife is quickly become aware of her role as "property" and does not like it.
We are staying out of this part as much as possible until they work those issues out.
We don't discuss it. We still see them alot but don't get involved in the conversation if it comes up on their relationship.
We are still very much up in the air.
He hasn't officially said the friendship thing but has referred to it.
I truly think he is so much in love with my wife he has no idea what to do.
He knows he can't have both but doesn't want to give up either.