I'd move back in. she's the one cheating on YOU! She abandoned the marriage - why should you move?
And yes, let her go. Sure you love her. I love my W. We both need to look at ourselves and ask, "What's wrong with me that I'd be willing to settle for this treatment?" Lack of self-respect.
When OM is involved, there isn't much you can do. She's addicted. She's infatuated. She's giving her emotions to someone else. The only way that will change is a conscious decision on HER part. Not yours. So you can sit around and worry about it all you want, but it won't mean anything. So why not spend that energy on yourself instead? Make YOUR life what you want it to be.