Agreed,
firstly sorry to hear about your friend but at the begining of the post you're saying that "he had thought the car was a cut'n'shut or just wacked from the back" so the fact that he had pretty much knew that the car was damaged (cut and shut or whatever) and agreed knowingly that this was the case even if the dealer knew about it then its your friends fault (thats just my opinion).
When the accident happened did the car snap in half or just get damaged cause you said it bent the subframe.
i'm still amazed that such an impact and the other car was able to drive away but anyway.
This is not having a go at your friend or anything but I've seen alot of people buying shocking cars for cheap and they know about it and then when something goes wrong they are surprised. There is a simple rule that applies the majority of the time "you get what you pay for".
Anyway good luck to your friend.