I'm not sure Tinder got the nth-degree thing quite right - first degree is someone I know, not someone who I have a mutual connection with.
You're not going to use Tinder to date your friend. But you would use it to date your friend's friend. Smart move by them.
Tinder has been showing users people who they are already friends with for as long as I've had the Tinder app. Tinder isn't as useful if you already know the person, but it's still got use.