If he really loves you, then YOUR feelings would be more important to him than hers.
I am not one of those women who think that people ought to throw away pictures of former lovers; they represent earlier chapters in a persons life. However, keeping a photo of her in his wallet is unusual, to say the least. I don't think most women would put up with that. Tell him to put them away in a photo album in the closet or something.
Also, I think you are misinformed about how common it is to be friends after being lovers. Yes, it does happen occassionally, but not usually, especially when one person still has feelings for the other.
You need to quit being such a coward, and tell him what is on your mind. You need to have some clear boundaries, or you will continue to be walked on. Being so passive is not going to keep him around if he is not interested in staying, and in the meantime, you are feeling like crap. He will have a hard time respecting you if you have a hard time respecting yourself.
Relax... I'll need some information first. Just the basic facts - can you show me where it hurts?