Oh Barf. I'm glad he's understood it now... but even still...
Even if you were bisexual, his attitude is gross. Not every bisexual woman wants to get with every other bisexual woman. Maybe you wouldn't be attracted to Farrah anyway. Maybe she wouldn't be your type.
Now back to reality. He is still the pivot in a vee. Even if he says he understands that you're not bisexual, you all need to realize that you don't have to be One Big Happy Family in order for this to work. It's enough for you and Farrah to be civilized. Friends is a bonus, but not something you should feel compelled to work towards unless you really want that for yourself, not for him.
You say you're okay with kissing and a little touching. I encourage you to evaluate whether that's something you actually enjoy doing or something you feel pressured to do for his sake.
I can't seem to shake the feeling that he's turned on by the idea of his girls being together, and that he puts more importance on his sexual fantasy than your own emotional health. Make sure you set limits that you're comfortable with, and don't let him push you beyond your boundaries.
“As I am sure any cat owner will be able to tell you,
someone else putting you in a box is entirely different
from getting into a box yourself.” —bisexualbaker