How to address it? Honey, seriously, I think he's put out some strong signals. I'd really just wait for an appropriate place - like, if you're just out somewhere nice, like at a park near sunset or just a very peaceful setting, and I'd just *tell* him. If conversation manages to lead up to it again, even better, but even if you have to just put it out there (like, "So I have this friend, and she's very intensely into YOUR friend, how should my friend go about telling your friend?" Or something, that was probably a bit cheesy) I'd do it.
I'd kill for MY best friend (who's been such for TEN years) to have gotten so audacious by now. I'm going to live vicariously through your situation here. And Gribble's right, it seems like guys have bigger, more sensitive egos these days than ever, so they've gotten a bit pussified about approaching.
If a natural avenue doesn't present itself for the subject to evolve on its own, then I'd flat-out (if gently) bring it up, and just tell him. It really does sound like he's interested.