I missed that you had not even met in real life
Definitely cut loose. And if you dont, dont whinge in a few months IF she ends up with him. Really. Its obviously what she wants, though thinks she will never get but would grab with both hands if there was a possibility. So on the offchance the possibility presents itself, protect yourself in advance.
Meanwhile for you to say shes gorgeous to you etc but others wouldnt think so makes me think you do not find her as gorgeous as you say you do but realise it doesnt look good to say...shes not a looker. I think I get where you are coming from but that bit kinda came off as..bitter.
I am in no position to give relationship advice right now (or maybe ever though) so I give honesty instead
My own relationships are a slight ****show and I have given up on 'relationships' in general as really cant be arsed and friends with benefits situations seem the way forward
Might suit you better. Maybe also, someone you can/have met in real life too? I mean, the other guy could be thinking the same..'omg we have something special but she will NOT stop talking to this other guy online!'