I have learned this painfully with my child growing up in the LDS community. The first time that happened could have been viewed as a warning sticker, and been your cue to exit stage right. I think your response is Bang on. The extent of other physical activity depends on what you both want from the relationship, though in general the Mormon Church frowns on sexual contact even beyond intercourse. There are plenty of marriages between Mormons and non-Mormons. And, as I was writing the reply, above, those thoughts went through my head.
But there are many people on here who truly devoutly believed in Mormonism and broke free. I still feel enriched by the contrasts, but in the important things, we have largely come together. I realize that the answers to many of these questions may be different for every family, and that we need to continue to discuss them more as a couple as we continue to think about our future. A good man is not defined by his religion and a great marriage is not defined by where it takes place. I follow a blogger who is a nurse and her stories are gut-wrenching. See, I am a SAHM and my husband has just gotten accepted into a 4 year pediatrics residency program this year. It all depends on the girl.
Whatever your leaders have said, consider their counsel, give it the weight it deserves, then counsel with your Heavenly Father about your own situation. It MAY be true that she will be miserable with him and make him miserable with her. Best wishes on your next expedition. I'll definitely talk with her about my concerns, and will be spending time with her family over the upcoming holidays so that will be a good chance to see how they treat me. The important thing is that you are getting to know one another, not that you are always doing fancy things. Having said this, there are several aspects of this particular religion that you need to be aware of as these will greatly affect how she will approach you and the relationship as a whole. I'd love to hear from more veterans about how to make this work in the long run.
This is because they gave up the structure of what made them desirable in the first place. It's really cool to be able to connect with someone who shares all of those things with me. If she says that the mission was the greatest experience and best two years of her life, any chance you have at a normal long-term healthy relationship is dim unless you convert. It's not impossible, just painful and unlikely. Who knows, maybe a little lighthearted texting is just the 5 minute break he needs.