Lariza

Whatever he had declared in the ESTA application, it would be in the system. Therefore, if he was to complete a DS-160 to attempt for a B2, the CO would still have that piece of info concerning his criminal record and ESTA denial. 
 
He can apply for a B2 but I'm not sure about the approval rate for someone with a criminal background. But I guess, it probably depends on the type of crime involved.
 
From the website of the US embassy in Australia:
 
I was arrested/convicted of a crime years ago. Can I use the VWP?
ESTA will assess your eligibility for travel to the United States under the Visa Waiver Program. The assessment includes questions regarding previous arrests and/or convictions. If you have been arrested for or charged with a crime, including offences involving the use of a controlled substance, you may require a U.S. visa and, in some cases, a waiver of ineligibility. If you choose to apply for electronic travel authorization via ESTA, the system will advise you whether you must visit one of the U.S. Consulates in Australia to apply for a visa. For further details on ESTA and to see if you are eligible for the VWP please refer to the ESTA website.

Yet another thread that demonstrates that people should be aware of not just the advantages but also the disadvantages of their chosen visa path. Yes the K-1 is faster than than a CR-1 - and that's usually where most people stop reading and make their decision. As you are fast discovering, the K-1 has a lot of disadvantages with regard to travel, employment and even the ability to drive (depending on your state of residence). I strongly urge you to abandon the K-1, marry anywhere that will allow you to, and pursue the CR-1 so that your new wife can continue to live the life of freedoms to which she has become accustomed. She can visit you during the process using the VWP - I and many others did that with no problems at all. There are numerous horror stories circulating about CBP possibly not letting spouses of USCs visit under the VWP but to date I have yet to find solid evidence of someone with a good travel history being denied a short visit with their spouse under the VWP.  

I don't think that's gonna be an issue since she's from an ESTA country. When I was flying back and fourth visiting my then boyfriend, I saw several people on the flights with their wedding dress in tow. When I flew over to marry my husband, CBP asked my reason for visit and I replied to marry my husband. I had no issues. Mind you, I did have a long history of visiting the US and leaving within a couple of weeks.
 
So being from a VWP country, having visited the US before and bringing proof of employment in Australia and ownership of house/rental agreement and you should be ok, hopefully. 
 
I can't believe Australia don't allow same-sex marriage. Australia strikes me as a open and forward-thinking country. How disappointing.  

I'm literally saying the same thing, buddy. Read more carefully. I'm only saying using VWP with the intent to AOS later on is visa fraud. 
 
A. If you enter the country on VWP with innocent intentions and then fall in love and get married - you're okay. No laws against that.
 
B. If you enter the country on VWP with the intention to marry a USC and apply for AOS immediately after - this is visa fraud. VWP cannot be used to substitute for a K-1.
 
C. If you enter the country on VWP to get married but then leave after your wedding within your I-94 expires, without filing for AOS - you're okay. No laws against this either.
 
We're not saying different things, so if you'd read more carefully and stop telling me that what I'm saying is "untrue" I'd appreciate that. You're making this more confusing for everybody.

Hi there, to my knowledge, once you enter the US with the k1 visa in the passport it can only be used once. Leaving the US would mean abandoning the k1 visa so if she wants to return (after marriage) she would need a CR1 (spousal) visa instead. I am not sure if she can still enter the US using ESTA or if the abandonment of the K1 will have an effect on her status.

Once the K-1 visa is in her passport, she must use it at her next entry. At that point, the K-1 visa is no longer valid and the I-94 stamp in her passport will be used for her 90 days of legal status in the US.
 
If you file for AOS and then leave the US for any reason without AP, the AOS application will be automatically deemed abandoned and denied.
 
Even if you don't file for AOS, she cannot re-enter on the K-1 visa again. Somebody technically can enter on VWP afterwards, however 1) it's extremely unlikely to work since she has documented immigrant intent, and 2) it's visa fraud to enter the US via VWP with the intent to stay. Do not do this. She will need a CR-1/IR-1 visa to reenter the US...ETA 12-14 months.
 
You can request emergency AP, but you need a compelling reason.
 
Edit: I agree with the above - just don't get the K-1 visa until you're ready to live in the US.