Why not just tell your wife that 'a self confessed cheater who you can't bring yourself to trust, coming into your home, and massaging her is making you uncomfortable?
This is a perfectly understandable feeling.
Her response to that will tell you her level of empathy and respect for you & your feelings.
Note : it is my personal opinion that you don't have any right to tell her who to be friends with, but you certainly do have a right to be protective, and to ask that cheaters of the opposite sex not touch your wife, even in 'friendship'.
On the good side - she is openly telling you all this, so apart from avoiding grief, she doesn't feel she has anything to hide (otherwise she feels you can't tell the difference between a plant and an animal).
I think also, that it would be interesting why she thinks that she would be 'avoiding grief'...to me this means she knows it would make you uncomfortable / jealous...now all you have to do is decide whether or not your discomfort / jealousy is reasonable in the circumstances...if it is...then you need to talk with her about this conflict.