Dusty and Fasder, I am sorry you had to go through this. While it's a great thing that you were able to get this information and to not get "lead on" too much, I am sure you are very dissapointed as well, since you stated that you were very compatible in several areas.
Lora and I had this happen to us about a year ago, where a couple had been in contact with us and everything seemed fine, until they said that they normally "meet" with a couple and then everyone goes their separate ways for the evening, and then we meet back at the end of the night/next morning. (as in, I would go with his wife, and he go with mine).
After all was said and done, we found out that it was pretty much the same thing you explained. While we actually prefer swinging in seperate rooms, something like this where they had mentioned this was just a little too much for us and the red flags started flying.
Keep your heads up, you did the exact right thing and your response was natural. You will find those that you will be compatible with you--just give it time, they may show up when you least expect it!!
And--by our handle, yes we DO believe in friendship and having benefits as well.....*WINK*
Tim
