I believe that your husband still has good feelings for you, deep inside, but something is blocking them. Something has convinced him that he cannot share them, cannot stay with you. It's HIM, not you. He effortlessly says that you look pretty all the time, but then he can't stay with you. He instinctively tries to make you laugh and delights when he sees you smile but them cannot bear to stay with you. Why? Not sure, but it sure seems like his issue.
As for why he will not leave - one possible thing maybe you have not considered: leaving the domicle has legal implications, whether it is a "legal separation" or not. It means he is leaving his children and he is giving up defacto custody.
I left the house after my wife continued to refuse to suspend her relationship with her boyfriend. She changed the locks, began to allege violence and since then my time with the kids has been severely restricted. Any attorney worth a lick would have advised your husband not to leave until there is some sort of agreement in place.
His statement "There's nothing remarkable about me sleeping with d7 in her fort" also suggests to me that he is seeing an attorney. In the context you described, that is a defensive statement, absolutely. My take is that he is afraid that you will accuse him of misconduct with the children. Attorneys in this situation advise their clients to avoid any appearance of impropriety.
This is the tragedy of attorneys and divorce - when people sign up an attorney, often they turn off their brains and just let the lawyer drive. True feelings disappear, and they replaced by scripted legalistic posturing. It's sad. it's de-humanizing.
You think he is a JERK, and I guess he is. But why? Is there a reason he is acting so JERKish? Maybe he is in deep pain. For someone to act like this, there must be something wrong. Not trying to excuse his actions, nor am I saying that you shouldn't feel the way you do. I totally empathize with the feelings of loss, the unending chorus of "why why why does it have to be this way?", and the belief that this is soooo simple to solve if only... if only.
But somehow he cannot handle the "if only". he cannot face it, somehow. Why not? There's something lurking there. It's HIS issue, not yours.
This is why it sure feels like relieving the pressure seems right. Acceeding to his wishes where it makes sense. Being strong for yourself but at the same time, accepting what comes.
(ps: I face the same challenge as you)
M 43 S14 S13 D11 D7 Divorce final: Jan 2009 Making it up as I go....