Though he will move out, he said he'll still come back home every day since he wants to pick up kids from school and stay with them at home until they go to sleep. Then he'll go to the apartment. He will also continue to have dinner at home if I cook. Is it rediculous?
Is this for real? Seriously??
Yes, this is not only ridiculous, but it is ENTIRELY inappropriate. If he moves out, he moves out -- your place is not to be an inn, where he comes and goes as he pleases. The two of you will need to set up a formal visitation schedule with the kids, and separate your finances.
He doesn't get to have the best of both worlds -- he has to put his big-boy pants on, and CHOOSE. The situation he suggests above would be confusing (at best) and emotionally damaging to you AND the kids.