I always try to give the benefit of the doubt. Could be some strong psychological cross-currents here.
He knows you love it, admits he's jealous (he loves it too). He hears you complaining about it occasionally. So...in his mind he's doing you (a friend) a favor with the offer. You'll know its going to a good loving home and your spirits should improve.
Maybe he used email as he knows deep down he shouldn't do it and can't face you.
Thank him for the offer, tell him you're making headway, and you'll likely never give it up. I see you told him its not for sale and its a dumb-ass offer. Now knowing that he can't have it, he may actually persist. Love is funny. Could get tricky.
Do something positive with it, replace a cable, polish a part, (you have put $1,000 into it) and talk about that, only. In his case, don't share about the negatives. Lay that on someone else. Like the forum.
How's that for armchair pop-psychology? Don't forget...it's free!
PS: While its everyone's right to take offense, it rarely accomplishes anything and mostly punishes the offended.