Your wife is testing you. SHe's testing your masculinity and your courage.
if you just back down and watch she is NOT going to be impressed. She may laugh and go off to her affair and have fun, but she loses respect for you... And its VERY HARD to win over a female who has no respect for you... I would argue it can't be done at all.
If you stand up, protect your marriage, tell the creep to BACK OFF, and get in thiker wtih MIL and talk about the importance of making mature decisions and show her a responsible adult she will be a LOT more impressed.
She will be mad you took action, but she will respect you for it.
You need to learn to protect your family dude. Your wife won't have an ounce of respect for you if you don't.
"What is best for my kids is best for me" Amor Fati Link to quotes: https://www.divorcebusting.com/forums/ubbthreads.php?ubb=showflat&Number=2879712