Should you ask to change your level of interaction with your boyfriend/girlfriend because of another girl/guy?

My bf & I are very open about our relationship (PDA, always introduce eachother to anyone & everyone as this is my bf/gf). He's a great guy & makes everyone know I'm his girl, & invites me to everything + anything he goes out for (even when the other guys don't bring their gf's). Problem is, he warmed me that a girl he used to date might be at a party we're going to & that he would like to tone down the PDA as to not hurt her feelings. He dated her & said he didn't want a gf, so they broke up. Immediately afterwards we met & he wanted me as his gf. Everything else about him is perfect, except that last statement he said. My opinion is: 1) I'm your gf, treat me like it. Don't change how we interact due to another person, 2) she's an adult, she'll get over it, 3) either you make her uncomfortable or you piss me off, take your pick, 4) -I- would never have another guy determine how I interact with my man. Am I right? Wrong? How do I respond without sounding crazy?