OP, if you told your friend that this was unethical and stupid and that you respect him less as a result, then you have done your duty. If he respects your opinion at all, then hopefully he is embarrassed and is looking to you to absolve him for doing this - and you shouldn’t. If he doesn’t respect you and your good opinion of him doesn’t count for anything, then you are not friends anyway. Time to walk away. Hopefully, that will be sufficient punishment and he will have to live with the knowledge that he lost a friend’s respect by being an unethical jerk.
An no, the colleges probably won’t notice unless it’s a much better essay than his writing score and grades would suggest - and over-edited essays are nothing new in college admissions. The sticky fingerprints of parents and college counselors are everywhere on those thing in too many cases. It just isn’t going to make that big a different. But if it did, then he also has to live with the knowledge that he got into a school based on someone else’s merits rather than his own.