GalaGirl thank you so much, your thoughts on this have been a great help. I will be able to express my feelings much more clearly now.
Magdlyn, thank you, your very straightforward logical questions have made me think more clearly. My response to the questions that you raised took a bit of thinking about. I'm shocked (probably surprised is more accurate than shocked) because it is unusual for him to articulate his 'wants' so clearly without prompting. I feel uncomfortable because it is a bit of a jolt to our security (but that is not necessarily a bad thing).
The question about C watching instead of me is perfectly reasonable. She wouldn't want to, I know that even before the issue has been raised with her. She is much more prone to feel hurt or jealous than I am but if he explains what he wants and why tactfully she will probably agree to it. C has a disability and because of that the possibility of her watching (or participating) isn't very realistic even if she wanted to. Yes I have watched and participated in kink stuff with my husband and C and I like it. The difference is that I am emotionally involved with both of them, I have no interest in this new person and I have no desire to participate in or watch something which I have no emotional investment in. It wouldn't be such a big deal to watch if it really matters to him, it just wouldn't tick any boxes for me. Like you I don't really get the watching thing.
Assuming that C agrees to it happening. I think I will talk the issue over with her before giving a final answer.