No I don't think the OM being involved with the kids would be healthy, even if he wasn't an drug addict, abusive leech. She probably feels confident around him because he might be the only person more screwed up then her.
He probably tells her how he needs her in his life, she makes him feel good. Blah blah. I agree snap her backside into reality, and I agree the children should know the truth.
What I am really asking is are you sure you have had enough and this is what you want. Because what you want today might not be what you want tomorrow. Have you thrown in the towel on her and decided she needs to learn things on her own without your support.
Believe me brother I can empathize, but maybe you can force her to pay her own bills and leave her to own device without kicking her out. Also given her fragile and I dare say unstable mind, do you think you can protect your children better by still living together and having some sense of what is going on, or by your children visiting her on her terms God knows where. Just asking some questions.
On the other hand maybe helping her pack her crap and telling her go be with who ever you want to be and good luck to you, will snap her out of it. But if you do that accept the fact she probably isn't coming back anytime soon. If she fails on her own she will lose all self respect and won't ask for help.
Pride can be a real negative sometimes.
Married:10 years D final 8/28/08 10 minutes is all it took Life goes on and DB was no small part in growing from the Divorce!