How do I forgive and forget his crush?

I don't think you are over-reacting, but I do think that what he said is right, you were tested and he ped. He didn't cheat on you, he told you what happened, and he isn't going to do it again. As for the masturbation, that is just a fantasy thing. Yes it hurts that he felt that way about someone else, but he didn't give in to the temptation, and he is still there with you. It will always be there in the back of your head, but as long as you both keep the communication open, it will become a distant memory. If there are days that you are feeling a little insecure, let him know. If you notice that he seems a bit distant or "off" ask him about his day, ask him if there is anything he needs to talk about. He sounds like a guy who is good a communicating. Just keep those communication lines open.