Oh Jimi...wow, you've got a sad situation. I feel so bad for you.
My own sitch - I am divorced. During my marriage, I had become unfaithful. It never ended up in a sitch like yours...however, since I have been unfaithful in the past, I can see right through all of your wife's words.
I know you don't want to hear this but - the best thing you can do for your marriage right now is to stop "seeing" your wife in a dating sense and to make an ultimatum: OM or me, but you can't have both.
You can still see her and your daugther together for "family dates" as long as you and your W can refrain from any R talk.
But to see your W alone for intimate dates is only going to break your heart in the long run.
I know that right now, it seems like there must be hope, or else why would your W be seeing you?
Well...here is the hardest part to tell you but...it may be that your W is seeing you on the side of her relationship with the OM because they are separated by so many miles and she is sexually frustrated. In other words, you are giving her sex, which the OM cannot do right now, but she would choose him first if he were available.
I don't know that this is true, but I suspect it is.
This does not mean she isn't enjoying the intimacy with you...but it possibly means she is actually "with him" in her mind and heart during the intimacy.
I am telling you this, knowing it will break your heart...but you NEED TO KNOW this so that you don't end up with a worse broken heart later.
You can't keep letting her have cake and eat it too, when that means that YOUR HEART is the thing that (possibly) will be broken and tossed aside in the end. You just can't allow that to happen to yourself. No matter how lovely having dates and sex with your wife is right now...its only going to make it hurt worse later if/when she chooses OM over you.
Now...what will REALLY turn your wife on is for you to make a stand for your marriage...and the way you do that is to refuse to let her use you like that!
Again, I know she does love you and she enjoys your company. I do not mean to minimize the time you two spend together. I do not think she is faking it just to be with you. But I do think that she would not be seeing you at all if her OM were not long distance.
You can also bet money that she has not told her OM that she is "dating" her husband and having sex with him. That would destroy her affair. OM's tend to be yucky individuals (obviously, to prey upon a married woman) and they also tend to end affairs in a yucky way (as in - if he knows about you he will drop her like she's hot).
I am so sorry, and I wish I could tell you "great! You are dating her and having sex! That is progress!" But in your sitch, where there is an active R with an OM, this is NOT progress. It is only disaster (for you) waiting to happen.