Before you decide how to act upon this, you'd want to know what is behind the motivation to tell her. 1/ is it to let her know what sort of a person he is (most likely she has an idea if he had left his wife and kids for her 2/ do you want her to feel as bad when he was unfaithful w/ her to you, 3/ do you want to punish him if this leads to their break up.
You do not want him back yet you give in to his sexual advances and there is a reason for it even the reason is still subconscious. It indicates that you're not completely finished with him. Yet, what is taking place is not healthy for you, him or her. Even in this situation you're still the woman in the middle.
Telling her may not change anything for both of them. They may have some sort of an arrangement to have an open relationship. What would be most helpful is to think about what is letting you cave in to him and then to decide how you want to proceed (since right now at least you're saying you do not want him back)