I feel for you and I understand your concerns. It sounds like Stephen is bound to end up hurt because Jen's not being honest with him, her husband or herself. It doesn't sound like she's ok with him being with you or that she's fine with a casual relationship. And the lying to her husband...even if their marriage is on the skids honesty is honesty. Stephen is the other man. And not in a good healthy poly way.
I don't know if I would butt in though.