we were packed tight, it was hard to be careful, so i started lifting them back away then got faulted from the dealer for them going past the table edge, wasn't sure what to do then, I managed somehow
Don't ever lift your cards up off the table; depending on how strictly the house is run and how well the dealer pays attention, this will not only kill your hand instantly, but could also result in a penalty (at least in a tourney).
I play in a bar poker league.
Well, that just about says it . . . I know some people take these games seriously, but if you want a quick crash course in what NOT to do while playing poker, attending just about any bar tournament anywhere should suffice.
As to the OP:
One thing that no-one seems to have mentioned so far is actually the most important one, imho, and that's how all this has affected YOU and your play. Anything that takes your attention and focus away from your game is generally going to hurt you, and by focusing so much of your thought process on this one guy's cards and your internal "dilemma", who knows how many other opportunities,
tells, etc. you were missing in the mean time? And besides, let's face it: knowing just one addtional set of hole cards isn't going to make much of a difference at a full table most of the time; the only time it'll give you significant edge is if you get this guy HU, and you'd still have to find the right cards, situation, and board to truly take advantage.
Anyway, my approach is to tell the dealer IMMEDIATELY so he/she can remind the player in question to protect his cards appropriately in a neutral manner -- that way there won't be any misunderstandings later on, and no-one at the table can claim that you or anyone else had an unfair advantage (including another player who may have been able to see this guy's cards). The same thing would go for someone lifting their cards up (if the dealer doesn't notice), showing them to a neighbor, railbird, etc. and similar violations (which occur quite often among regulars in b&m cash games, from my experience).