Yeah, you need to make a clean break up with him. Sounds like he is fizzling himself out of the relationship. You should date other men in the meantime. He is not worth it due to his behavior.

Very inappropriate. That behavior needs to stop immediately. Ask yourself this, would you mind if your wife was doing some cuddling with another dude. Like in case she didn't like cuddling with you, but another dude, yes. Ask if you would be okay with that.

Very strange behavior. Just tell him it's very weird and if she keeps doing it, his friends are going to find out and ride that joke for years to come.