Update
The last time I looked at this thread before writing this major response was on post #54. This post is in response to everything that has been said since post #54.
To everyone who is debating betrayal and cheating: I agree with the people who think that he cheated. He broke an unspoken rule of the gaming table - the DM material is DM MATERIAL. It is not meant for players to see or take part in. In this particular circumstance, I told him not to, and he did it anyway. I don't care if "I told A to tell B, so A went and told B, which means that B isn't personally acountable because I didn't directly tell him myself..." - that doesn't even make sense. The player knew and understood my wishes and specifically and purposely went against them, learning more about what was behind my DM screen than he should know.
To the people that think this thread is "getting out of hand": I don't personally think so. I don't think anyone is specifically being called out or attacked for their views (even when my friend showed up, I pretty much immediately told him to email me at work so that we could discuss the issue outside of this forum). This thread may be a serious discussion ABOUT those views (very serious), but that's ok - that's how we learn from one another. On top of that, no moderators have deemed it necessary to step in, so I think everything is ok. I also don't feel as though I've taken any offense to anything said about this issue.
Regarding whether or not a player that does this is "trustworthy": I think it is obvious that a PLAYER of D&D that does something like this is most certainly untrustworthy AS A PLAYER. This might not make him untrustworthy as a person overall, but any player that does this will never roll a new level's worth of HP out of my sight ever again. I really don't understand how anyone could think otherwise. A player that does this is cheating at the game - plain and simple.
As for the other players, they've known about all this from the very beginning, and they both voted to just keep playing.
Now for the UPDATE:
I decided to not play D&D with the player in question. This decision came about because of the way he was acting outside of the game. I repeat: This decision has NOTHING to do with the ingame consequences of his actions. What this has to do with is how he has acted as someone who is supposed to be my friend.
I said to him: "We would be having a totally different conversation if you actually cared that you did the following: 1) potentially wasted the money that I, not you, spent on the adventure, 2) wasted all the time that I put into running this game for you and our other friends, time that vastly exceeds anything you've put into it as a player, and 3) potentially ruined the game for our other friends who probably can't play now, and if they ever play this adventure again with a different group will know 'spoilers'. However, you don't care. If I was in your position, even if I didn't care either, the first thing I would say is 'I'm sorry', because my pride isn't worth the game, our other friends, or our friendship."
To which he replied: "You're right, I definitely respect the money that you've paid for the adventure. I didn't pay anything. And I've DMed before, so I totally know and respect how much time you've put into the game. I might have to consider apologizing. I'll really have to think about it though."
So, I'm not going to let anyone treat me like that, about ANYTHING, especially when they are supposed to be my friend. This could be about cards, or guns, or lovers, or anything else. My integrity and standards are higher than that, and I will not be subjecting myself to being in the company of someone who disrespects me as such.
All the players know, including the one in question, and the rest of us will be getting together very soon to discuss what to do about the remainder of the game.
I would like this thread to continue, though, as it is a good discussion about what is "cheating" at the gaming table.