outofsoap it sounds like you've got a good action plan, and I agree 100% that you should wait until he gets home. If it ends up that you have to be the Reluctant Bearer of Bad News because his wife doesn't have the guts to do it, preface it by reminding him how long the two of you have been friends, and tell him that it's because of your friendship that you need to tell him. You're not the one shagging his wife, so there isn't really any reason for him to be pissed at you about it. Maybe temporarily he'll be angry about it and you might be the most convenient target for him to vent on, but don't take it personally; eventually he will realize that you were acting in his best interests.
But what about the guy? 'Don't blade buddy' was one of the first things drilled into us on BMQ. While I don't approve of what the wife is doing, I have an even lower opinion of what the guy is doing, and his co-workers that know and condone what is going on. Those guys are arseholes and personally I would never trust them either. Perhaps it's a double standard, but I do expect military people to adhere to a higher standard than civilians.
And if I can make another suggestion, whether you tell him or someone else, when he finds out about it make sure you reach out to him so that he knows you are in his corner. I've heard too many stories about our guys committing suicide over a breakup, and I've wondered why it happens as often as it does. Sometimes the smallest act of kindness or compassion can make a temporary improvement in someone's perspective, and give them the energy to stick around another day. And then another day, and another until they get through it.
Good luck!