You should check out Ken's post today, there is a lot of parallel between your situation and his... Both of your wives are very childlike and have very agressive OM pursuing them... Ken's dealing with a local one though and he's getting no support from the community including the in laws.. he's been going it alone for a while now
if you look at his post though you can see that his wife is starting to see what a creep OM is... took her MONTHS to figure it out, but they DO figure it out eventually at some point...
If you keep exposing until the excitement wears off it does help the situation... ignoring it is NOT going to make it go away that's for sure.
I think if he keeps on tuning your wife out she will start to get annoyed with it after a while... Right now he's controlling everything and your wife's just following along blindly... She may need to see more of the negative side of him...
Have you done any research on this guy? Don't be surprised if this guy is chasing other women too... that's what happened to me.. my wife found out he was with someone else...
I would do some extensive research on his internet activities elsewhere if possible.. get his ip address and do some cross referencing... A lot of these creeps like to have a lot of balls in the air...