The thing that would upset me most about this situation is the level of intimacy indicated by the fact that OP and OM discussed their feelings with each other. I could understand if my husband started flirting with another woman, and even if he developed a crush. But for him to discuss those feelings with the other woman is crossing a line IMHO. That basically indicates that an actual affair was considered.
Yep, this would be the most upsetting part to me as well. This also explains why the woman is upset at the OP and not just at her own husband. If my husband came to me and said "I've been having some inappropriate feelings for your friend, and I'm sorry. I'm going to avoid her now, and I want to regain your trust whatever it takes" I'd be hurt and upset at him (although admittedly this would be far less hurtful than if he had actually acted on it, of course) but we could work through it if he were sincere.
If however he said "I've had feelings for your friend, and we discussed and decided to back off" then I'm going to be VERY upset and at BOTH of them and feel totally betrayed. Unless my friend's reaction was anything but "what are you talking about, I don't have any feelings for you and never have" then she was involved and there was a level of betrayal from BOTH of them. I don't really quite understand the feeling of "they didn't do anything wrong". I don't agree. I know I may be alone in this, but this is one reason why flirting is not as innocent as it may seem. Flirting leads to other things, if it didn't, people who are dating
would never flirt with each other. I'm not even sure there is such a thing as "innocent flirting" when the parties are married to other people. This is not to say that ALL flirting leads to affairs, simply that it is dangerous and risky behavior, especially when you are dealing with your friend's spouse! I think it was very unwise to engage in the flirting and I think it was wrong to have a conversation about it BEFORE talking to their respective spouses. I think whoever was feeling the "this is wrong" feeling first should have told their own spouse, then explained to the other couple why they could never socialize again. To have the conversation with the potential affair partner first is a betrayal in my mind.
Of course, I am aware that my views on this are more conservative than most, but I'm comfortable with that and I don't think that it makes me in any way disturbed or in need of help. As long as my DH and I are on the same page, I'm ok with that. And I can say 100% that he would agree that there is no such thing as innocent flirting when you are married to someone else.
I do commend the OP for stopping this progression. I do. She prevented much more untold hurt and destruction. But I can not agree that no harm was done.