Even though he said that, he's probably half-hoping you'll tell her and then his feelings will be in the open but he won't be the bad guy--in fact, if it all turns out badly, he can always have you as the scapegoat, since he was manfully living with his dark secret until you, the vengeful woman, broke it out into the open and hurt everyone.
My advice (and take this for what it's worth, I realize you don't know my and I don't know you) is that the person who reveals his feelings to the rest of the family is going to be deeply involved in the crash that you seem convinced is going to come right after. All those effects you alluded to, in both families . . . if you break the news to your sister, those are all your problem. In your place, I would feel no obligation to take on all that drama for his sake just so he can avoid the trap he's put himself in (he can't tell her how he feels, but he's convinced he has genuine feelings and has to tell her how he feels.) I would be tempted to tell her and maybe the whole family just to watch it all backfire on him, and I imagine that you are too, but that never works out the way people plan it.
Inevitably, if the family finds out that your H wants your sister, there will be drama and conflict and you will be pulled into it to some extent. But if you choose to participate, I think you'll regret it. Whether he realizes it or not, this is his problem. Married people will feel attractions to other people. If he wants to be married, he will have to find a way to deal with those passing fancies while preserving his marriage to the woman to whom he committed his life.
And one more time, so it's clear: yes, it was a dirty trick to pull, telling you this. I'm sure he knows it and is probably feeling some mixture of anger and shame, whatever he's showing you.
