Interesting point; the priest telling Joseph that if he doesn't take the pregant Mary as his wife, the ground will swallow him up like Koran. I've always pictured Joseph as being a "righteous man" and wanted to do what was right.
Joseph knew the law yet he was torn between doing the "right" thing in sending Mary away and doing the "lawful" thing which would be to report her which would possibly result in her stoning. It appears that Joseph didn't even contemplate doing the "best" thing in marrying her.* The scriptures state Joseph made the decision to send her away. It was only after Joseph made this decision that an angel of God interceded and told Joseph not to worry about taking Mary as his wife.
I'm not sure where all these threats and everything else pops up. It says that Joseph was obedient to the angel's instructions.
*I'll footnote this since it seems to me that under Jewish law, once you were engaged you were consider married-just not consummated until the wedding night. If a person wanted to break the vowels before the consummation process, it required a certificate of divorce. Thus Joseph had to "put her away quietly". Joseph couldn't just call off the engagement. I don't have my reference books but if anyone can shed light on this I would appreciate any corrections or updates.
A "VOWEL"??? Where's Vanna White???
The Orthodox Church titles him "Joseph the Betrothed." My understanding is that the intention was to remain in the betrothed state, which, as I understand, included "legal" co-habitation, but not licit "knowing." My understanding is that they never intended to marry, since it is not really a legal marriage unless there is "knowing."
When she became pregnant, Joseph assumed that it was by "a secret union" with another man (as our liturgical texts say). It is understandable that he would not want to marry her, since she had obviously, in his eyes, broken the vow that was the reason for the betrothal in the first place -- the preservation of her virginity.
If he loved her and wanted her as his wife in the ordinary sense that Protestants believe, his first reaction very well might have been to do the "best" thing, and take her to wife and decide to forgive and forget, covering her sin. If he had wanted her as his wife, but no longer wanted her because he was betrayed and shamed, his initial reaction might very well have been, in his anger, to do the "lawful" thing.
His actions in putting her away quietly reflect the actions of a distant relative who loves her enough not to want her to be stoned, but who no longer sees a reason to continue with the betrothal. This all fits in very well with Orthodox Tradition -- better, in my opinion, than does the Protestant explanation, although it is also a valid explanation.
He was instructed by the angel to take her to wife (i.e. "make an honest woman out of her" in the eyes of the world.) Our tradition is also that this formal taking of her to wife was to deceive Satan. In any event, they could not continue in the state of betrothal. The whole reason for Matthew 1:25 is to make clear that with the change from betrothal to formal, outward marriage, there was still no physical union -- making no mistake about her virginal conception. Consider that even though the Bible says that he took her to wife, this was only for the benefit of appearances to the world, since she obviously wasn't really his wife at that time, since they didn't consummate the marriage.
I checked several websites, both Catholic and Protestant, and the consensus was what you are saying here. The only way to break a betrothal would have been for Joseph to issue a bill of divorce, following standard Jewish law. So, having a case of cold feet would not have been good enough, but fornication/adultery would have been a sufficient reason. This explains the language in verse 19, i.e. they had not had the marriage ceremony yet.