She started seeing you for one reason, and one reason only...to make the man she really wanted jealous. She attempted to manipulate him, by manipulating you. THAT...is who you are dating. Accept it. Don't make excuses for her. And also don't beat yourself up. You did nothing wrong. This is just a problem that you have to handle. So take some time, make rational decisions...and go from there.
So where does this leave you? You have a couple options. You can confront her, ask her to explain things, and that you need all the details before making a decision. Maybe your relationship started out as a farce, but it could have turned into something more. So, working under the assumption that you end up giving her a second chance...be prepared for what that means. For instance...if this were me, she would have to, for the time being, move out. The relationship would have to be rebooted, and she would have to show a real appreciation of who you are and why you are worth fighting for.
During that time...no sex, no boyfriend/girlfriend activities. Nothing. Its as if your entire relationship never occurred. She would also have to be honest with her friends and family about what is going on. She doesn't have to give specifics...only that she fucked up, she is owning her mistakes, and the two of you are taking a Mulligan on the relationship and starting over.
She also has to go no contact with the other guy completely. That's non negotiable. You don't ever want to hear his name, or think of him ever again. She also needs to delete all that shit you read on the internet. And...she has to agree to an open email/phone/social media policy....which you have to also agree to.
She has to work to regain your trust. She has to show you that you are worth it. SHE has to prove to you that you are not a back up plan.
If however, you confront her and you realize quickly that you were in fact, just Option B...then you tell her to go fuck herself, and that her shit will be on the curb bright and early Monday morning so she better have all her crap moved out by then. Then change the locks, go no contact...and forget you ever met her. This is the nuclear option, and a lot of people in this forum will tell you to follow this path immediately. Only do this if you know 100% you can never get past this or if she makes it apparent that she is, in fact, a gigantic piece of shit.
I think what it comes down to is how she reacts to the confrontation. If she gets defensive and thinks she did nothing wrong, go with the Nuclear Option and put her ass to the curb. However, if she seems embarrassed, or ashamed, or 100% apologetic and remorseful for what she did....and shows a genuine kind of love for you...then maybe give her the benefit of the doubt.
None of us can tell you what to do. Because at the end of the day, you are the one that has to live your life...not us. Be prepared for all eventualities. Sort out all your anger and embarrassment before you confront her. That way...no matter what happens...you will know that you made the correct decision for yourself. Not because you were embarrassed, or hurt, or because some strangers on the internet told you to have some self respect. This is all about you. So decide what you want,
Because the reality is...you have to decide before you confront her if she is worth it or not. That douchecanoe turning her down could have been the best thing that ever happened to her because it led her to you. OR...she could be a manipulative fucktard who is only using so she has someone to split the bills with. So trust your instincts. You can't go into this wanting things to work. You have to be prepared to walk away. If your gut tells you she wants to stay and fight, and you want to stay and fight. Stay and fight. If your gut tells you to run like Forrest Gump on Methanphetamine...then run Forrest Run.
Good luck. Keep us updated.