So everything went well!
My friend stayed with us, and on the second night, I proposed that they go into the bedroom for a couple of hours of "alone time", shut the door, and do whatever they wanted. They took me up on it. My wife sucked his cock, he ate her out, they made out, he fingered her....however, he was nervous and not sure about the situation I think so he never got fully hard, so unfortunately they didn't fuck and my wife didn't cum. He ended up jerking himself off next to her while she was touching and making out with him. Also my wife said from what she could tell he had a really small cock, like as small as the smallest guys she has ever been with. However, she did feel very comfortable with him.
Honestly, afterwards, I was kinda surprised at how nothing changed between all of us....we literally all got along as if it never happened, no bad or weird feelings whatsoever!