Good points, Cham. I do think that they both knew what "this thing" was at some point. Jack knew early on, I think - you can see it in his face when he drives away from Ennis after their summer together and the fact that he initiates the "what are we gonna do now" conversation at the reunion suggests that he know it's far more than just friendship with benefits. I mean, you don't try to plan a life together with someone you just see as a friend, do you?
As for Ennis, I think he knows by the time they leave Brokeback that it's more than friendship, which goes some way to explaining why he's so angry/upset about leaving early and certainly explains his retching in the alley. The SS lets us know, though, that he didn't understand the feelings until a year later - he knows it's something strong, but doesn't know what. At the reunion, his passionate kiss could still be interpreted as just a strong physical desire for Jack, but the fact that he remembers things Jack said ("The army didn't get you?") suggests more. When he says "Ain't no reins on this one", I think he knows by then that it's something he can't control, something he can't stop....and something he doesn't want to stop either. Even if there are no reins to pull the horse back in, you can always jump off but he doesn't. Maybe that's as close as he ever gets to telling Jack he loves him...until it's too late, anyway :\'( When it comes to putting the word "love" together with his feelings, though, I agree that doesn't happen until he asks Junior if Kurt loves her. When she says yes, his wistful look tells us everything - yes, Kurt loves her so they're going to be together, just like Jack wanted to be with him, because Jack loved him. His "Jack, I swear..." is, I feel, the answer to that - he loved Jack too, and he knows it now.