g450: I think that is a good decision. I really don't believe that you respect this woman. I can't imagine anyone in her situation - car sex, married guys etc being respectable.
And I doubt you are ready for a R either. It seems to me that you both need to work on yourselves.
I know in time you will have a much different view of this period in your life than you do now. I know that I was very raw after my marriage ended and for a long while after. I was probably less choosy then than I would be now. Fortunately I didn't doing anything I regret or get in too deep but I can definitely see the neediness I had then - the feeling of wanting someone, anyone to love me again. And it is really easy to confuse sex with love and the feeling of being wanted with the real deal.
I am glad you have made the decision not to go forward with this woman. But why ease out slowly? It is better to get out fast in this situation before things get any deeper. Especially since the decision has been made. You're lying to yourself and her if you continue.