Who does this sort of thing? (Cheating fiance)?

My fiance of 3 years was pretending to be a girl online to "figure some things out." He was in a "relationship" with another guy for 8 months. I found out by reading a text from the other guy. I was really upset because my fiance had cyber sex with him, used pet names like baby and told him he loved him. When the guy found out my fiance was not the girl he thought, but a boy he freaked so I know he was at least telling me the truth about that. He says he felt no arousal when cybering with him and he only did it because the other guy told him to and he said when he said "I love you" it didn't mean anything. The other guy said my fiance would pressure him into it. I don't know how I can trust him to play online games if he's doing this, and how I can trust that he loves me if he can say it to anyone. How do I know it's only this once as he said to figure out if he were meant to be a boy or girl. He said he didn't end it sooner, because he didn't want to hurt the guy's feelings because he was emotionally unstable. I don't know what to think. What should I do? I can't seem to get over this. He says he's not gay, but who does this type of thing? I'm not the most attractive woman in the world, but I feel as though I deserve better than this!