At the risk of offending the people who support your cousin, I think you and your XW will be know what's best for the 2 of you, and your children. Particularly when she has a few under her belt, your cousin needs to mind her own business.
And as far as the kids go, sounds to me like they know more than what you think they do. Kids are much more aware of what's going on than we give them credit for. Not saying you should give them what might be false hope, but good luck hiding things from them.
And good luck on the R. I know the feeling of having my XW "move my hand" as you described. That was perhaps the most memorable night of my life.
Ron
M: 47 W: 50 D: 19 S: 16 Grandson: 21 months (now officially our son) Married: 10/2/89 Divorced: 7/31/09 XW moved back home 11/12 Re-married 5/25/10