The purpose of bursaries is to provide a 'high quality' education to a bright child that otherwise wouldn't be able to afford it.
Your friends, through their actions, have directly deprived another, more deserving child, of a place. (Even if they have put themselves 'technically' below the threshold for the entry year, that's them abiding only by the letter of the law, rather than the spirit of the law. Besides, other aspects of their application, such as asking their parents to lie about how their house was funded, are both immoral and illegal).
Personally I would write to the school and say that you know for a fact that one of the parents have provided a fraudulent application, but that you'd prefer for them to have the opportunity to graciously withdraw from the process. The school should call all the new bursary parents in, tell them that they know that there is a fraudulent application, and if the parents don't come forward willingly, they will investigate. (They may also wish to give a profile of the child/family who WOULD have had the place, so they can see the 'human cost' of their actions).
If they withdraw their application, I suspect you can salvage your friendship, as they'll eventually have done the right thing. If not, I don't think you can be friends, knowing what you know.
Finally - remember that this has nothing to do with your own child (except that it has made you more aware of the difference). Your DS is going to his school and nothing will change that.
But I'll second the previous poster's comments re state vs private. Don't get too hung up on your son 'losing out' by going to state school. All my uni housemates went to 'ok' state schools and have done exceptionally well (I mean EXCEPTIONALLY) well in their careers. While private schools are, on the whole, excellent, don't underestimate the value of a loving, supportive home (where education is highly valued), where as a child you're brought up to work hard and believe you can achieve anything. It's THIS that got all my housemates so far (all their parents are awesome).
DH and I have done a lot of school-leaver and graduate hiring in our time and, as long as their grades are 'good enough', it's the candidates with sparkling personalities, confidence and a 'can-do' attitude that get the job. (Re academic performance - if you can afford to put aside £50 a month from now on, that money will go a fair way towards extra tutoring at A-level stage, should your DS need it).
Good luck. It would have been far better if you had never known.