I like this take. Business plans should be thought of as the Constitution; a good rough idea, but a living document that is edited to reflect changing landscapes of technology and monetization. It's ok if it's not entirely realistic at first, as long as your partner is ok with adapting it as your product takes shape.
One of the best ways to confront it is not by "being open and honest", but by challenging it like an investor would. Imagine you're pitching it to Mark Cuban or PG; how would he challenge it, what questions would he ask, etc. Ask those to your partner, and see how capable he is of navigating that.
The code will have to be modified in all likelihood, and the whole business may have to pivot. While it would be ideal to find someone who makes you a millionaire on the first attempt, it's probably more practical to find someone who will keep chopping at the plan until they get something that has a chance.
The first version of the business plan gives you a document to critique and improve. It is perhaps overly optimistic to expect it to withstand contact with reality.
Good luck.