It is rape.
To the victim, it matters not a jot what his intent was.
There was a definite element of consciousness to his actions. Is he going to accidentally end up in one of his daughter's
rooms and stick the "tip" in? Of course not. He knows not to, and to this extent he was conscious of what he was doing.
Being under the influence of alcohol does in no way excuse or justify an action commited under the influence. Due to personal trauma, I used to drink regularly until I blacked out; but I still take full responsibility for any of the idiotic and dangerous things I've done when out of it.
In general, physiologically, men can't get it up when they are too half-cut, so if he was able to get an erection its unlikely he can't remember anything.
So this was rape from this woman's point of view, and I see her point.
But it doesn't have to spell the end of the relationship. But he surely must take responsibility for his actions by understanding that what he did was in no way acceptable. He really can't blame the victim for this one. If believes that climbing on top of a sleeping woman and sticking it in is "not that bad", then you have a problem.
The woman...well, its difficult to say. I can see why she didn't go directly to your DH. BUt I happen to believe she is out of order to go around telling third parties about this. That is just wrong. Also, I personally don't believe this is the catalyst for the breakdown of her relationship, although it may have contribued to her unhappiness in some way.
But thats a separate issue to the rape, because she most certainly was raped.