I was reading his dossier from the thalmor embassy and the way it seemed to me was that they were using him as a spy. I'm not sure if he is or not and if he is I don't know if he is willingly. Just wanted to hear what everyone else thinks.

He is not a spy... Read more carefully. He is seen as an asset to the Thalmor because he is weakening the Empire with the civil war.

Would be a great twist if he was though.

Yeah it just caught me off guard when they said they just released him, like there wouldn't be anything they wanted in return.

He was a PoW, released him after he spilled the beans of an event that was after the fact. He's only seen as an asset, as the torture he endured did effect him and is an exploitable weakness to the Thalmor when played right.