It appears to me that he is actually using his kids and our kids as leverage in all of this. I think that's wrong but again I want to take the high road...hard....sigh.
The truth is it may work out better for you if they are including the kids all the time. Remember. They aren't his kids. Once he starts to try and tell her how to discipline her kids or hears "you aren't my daddy", she may start to question what she is doing. The kids could actually work in your favor here. Trying to have a "love relationship" with a bunch of kids from two different families will make this HARDER to succeed.
I would let it play out. It won't be all love and romance with the kids all vying for attention. He is trying to impress her now by using the kids to show her what a great guy he is. That will wear off quick. Kids don't let up. He WILL make some huge mistakes and probably start to tell her how to "handle them". This will make her resent him more and more.
In the meantime, it would be wise for you to go out when you don't have them and have some fun. Having some fun isn't gonig to hurt your situation.