I think she handled it very badly. In any roommate situation, telling someone to move out is the last option, not the first (unless we are talking about illegal activities). She should have told you two that she was uncomfortable with it and worked out a solution: keep wrestling down, only doing it when she is out, having a scheduled time, etc. It is even worse when the two of you had radically changed your plans to help her out. You had basically given up all privacy so they could keep the apartment so it is not realistic that she wouldn't have any inconveniences. Asking about it would be a very uncomfortable conversation but necessary for her, so I would be ok with it ("yes, it is consensual and I even pin him down half the time") but that would be it.
Also, putting someone in a room with zero privacy is not a good idea, unless everyone knew about it and was ok with it. Specially a couple. Leaving out the wrestling, there are other couple activities that I wouldn't want to be exposed to but would hardly be fair to expect a couple to refrain from for a year.