Thanks LadyDi....I honestly believe that living apart is the only shot our M has.
I will propose that she live in the house for the next three months (contacted a lawyer and it is ok.). She makes all the payments and we begin mediation (with a lawyer) to come to a legal agreement.
This will give her a test run on what she is up against. D7 will not be disrupted during school (at least she won't be moving). We will hopefully get a few offers on the house. We will decide together whether we accept the offers. Most importantly she will definately know by then what she wants to do. I will DB my ass off from a distance and GAL and all that fun stuff. This is by far the best way to go but of course knowing my W, she will up her offer so that the -25K is - 10 or 15k.