I agree with Phoenix. Letting your son know that it just wasn't meant to be...it took too much work, long distance thing, etc. should be good enough. I would use it as a good life lesson about how some things work out, and some things don't, Know matter how badly you may want them. I think have the ex say goodbye to him in some way would probably be good. I think ideally, if you and the ex could stay friends and maybe get together for a movie and some pizza would be nice...every once in awhile.
I probably would not share your feelings about his son. Your son does not need to know that part...I do not think it would serve a purpose.
I am sure how ever you choose to say it to your son, it will be a bit hard for him...but kids are resilient and he will bounce back.
~I wanted to add something else....maybe you should consider buying your son a TV and an XBOX...it will not harm him and only give him some other extra ways to connect socially to his peers. Maybe think about it? You can buy a cheap TV and a used game console anywhere....might be a "fun surprise" to lesson the blow of your son loosing his "future step dad"??
I respect your views and your parenting style...just wanted to throw this idea out there...you mentioned being annoyed with the kids trying to be "cool", I get that BUT I would think since your son is already socially awkward you wouldn't want to handicap him even more by not allowing him to watch TV and play video games, like most normal kids.