Wow, what a tough situation.
First of all, he is 3.5 years old which for many is a really tough, tough stage of development so you'll see a lot of impulsive and aggressive behaviors, but I think this case is a bit more involved than that.
I would get down at his level so you're face to face, as soon as you see the transgression, and hold him firmly by the arms and say as calmly as you can, "I will not let you hit anyone in this house and I certainly hope that you will not let anyone hit you like that either."
Another thought if this doesn't work, is that they likely need more supervision while playing together because a 3.5 year old, never mind a 2.5 year, cannot be expected to work through all their disputes on their own without any mediation. You might want to be there with them during the playdate and help them problem solve together (they can do it, but they need help!).
If you or the other boy's parent is unable to be in the same room during playtime, then maybe it's best that you put an end to the playdates altogether.