I would let her know that you know. I wouldn't use it as a springboard to saying, "but I'll forgive you", to rant at her, and unlike Puppy, I'm a little uncertain about even saying, "I won't tolerate it" when the person has reached the point they already are saying they want a divorce. I'm wholeheartedly for outing it and putting my foot down when you are not actively pursuing divorce, but at some point it seems to me the spouse doesn't care if you won't tolerate it and just sees it as macho controlling stuff. I would go a step further and out the affair to this guy's wife. She deserves to know sooner rather than later.
Secondly, you need to make sure you are looking out for your full paternal rights. This isn't the time to play Mr. Nice guy while you are screwed over. It doesn't have to be vicious, but it needs to be clear that you intend to fight for your kids.
Lastly, this thing could blow over, especially if you tell this guy's wife and he ends up having to grovel to an angry wife and kick yours loose. I would start working on making your life as good as possible. Go under the assumption that she fully intends to divorce you and proceed accordingly. She may come back if this affair ends, but you can't wait around in stasis for it to happen. You can be friendly to her, just not a doormat. No more begging, pleading, promises to change, or otherwise looking like a wuss. Be strong, confident, and unbroken. Don't let her see you as anything other than fully put together.
You cannot be lonely if you like the person you're alone with. Dr. Wayne Dyer
