Listen, I sooo relate to you! But you hesitating to handle a situation that involves your kids because you fear that a woman who told you already she considers herself divorced and is having sleepovers with OM and your kids, just makes me nuts to read.
I want an experienced guy to chime in here and back me up. But, I am just not seeing the benefit of you wavering with regard to the kids.
I mean basically, she has you by the balls threatening for divorce...not good for your mental stability. Read other sitches here, fear of divorce can really screw up rational action taking. Trust me.