Yeah, this relationship is over. This girl swooped out from under him and scooped him up. The person who lives nearby is always going to trump a long distance relationship, especially when it is fading out. The boundaries of your relationship has already been crossed pretty badly into the emotional territory and I think it would be better for your mental health to just call it completely done.

Him saying that he wants to keep the relationship private is not a good thing and in this situation, you know for certain that things are going the way they are going.

Sorry that your evening sucks.