My brother is being a jerk..

It's called conversation. Talk to her and if little brother finds out, tell him what a fool he's been and the past will always haunt him. Remember he's the one who left for greener pastures but landed in the weeds, not his wife and certainly not you. Didn't you ever slug your brother when you were little or if you did maybe it wasn't often enough. He screwed up and needs to live with it and any chastizing you do.

I agree with bobintexas.
Your brother screwed up and now needs to know that it was not ok. If your sis-in-law welcomes himback with open arms, she is only letting his male ego know that what he did was ok and acceptable. And it is NOT! She needs to stand her ground, and it's hard to do because I am sure that she loves him but she needs to be big about it and show him that she will NOT tolerate that kind of behavior, otherwise he is just going to keep playing games with her and things will never get better.
As for him being against you for being on her side, you have every reason to take her side, she did nothing wrong, he did and you should not back him up in his ignorance. If he cant accept you taking her side, tell him to stop being an idiot to his wife and start doing what is right, then he will have you on his team!
Hope everything works out!
Let us know if you need anything!
-Lissa

I know it doesn't matter but he is actually 3 years my elder.

Wow. This is a huge leap of faith on your part, going outside for advice, but here goes: As you know from observing others, you inherit family members, you don't have the luxury of choosing them, unfortunately. So naturally, you're going to be torn. And well you should be, because you've been pulled into the middle of this mess. You know your brother behaved like a complete jerk, but he's family. So you have to ask yourself a few questions: How important is this whole family thing to you? Does he need to be taught a lesson? Will he learn from it? And, will the two of you eventually reconcile, or is that important to you at all? However, if you feel strongly that your brother isn't going to change, you should (separately) tell that to both of them . . . and then, step back. They're both adults, they've been together almost a decade, they need to be the ones to make that fateful decision. But your brother needs to know -- from you -- of the predicament he has put you in, and that, even though he's family, because of the awkward position you've been thrust into, you are entitled (almost obligated, at this point) to give your opinion, given your involuntary involvement. Will it hurt him? Probably. But if you articulate how you feel cornered by this, he will understand. And as a result, he will probably get over it, eventually.