Scorp, I'm on the fence about the location. I agree that what YOU Want should be your starting point and that considering moving should be a contingency. In saying that, I come from the west coast of Australia and my wife from the east coast. I grew up in cities while my wife grew up in the country. I've always had excellent work opportunities in cities, particularly in my home state, and next to no opportunity in the town I live in. At the end of the day though, if my wife decided she wasn't going to move my choices were limited to stay with the kids or pursue opportunities out of town au from the kids. On location, it was my wife's way or the highway.
I suspect you're going to have the same issue here and it's great that you're prepared to move. I would start at where you WANT to be first. If you think the town and house your kids grew up in is best, where you currently work and have family and friends while your wife stole your kids away, then start there. Don't forget that your wife is using her parents as a safety net. At some point she'll have to be a big girl and make her own decisions in the world. Only once you've exhausted your options to stay (if you feel strongly about it you can involve your lawyer) THEN consider moving.
In saying that, I had a preference for where I wanted to live but ultimately didn't care where as long as I was with my kids. I stayed in the town I'm in, found a job and so far my wife and I are in the same house. Being flexible works and as you've alluded to, it's cheaper and costs less time than involving lawyers. Plus you'll get more time with your kids in a shorter time frame. But don't forget about what YOU want even if you have to move. It's your life after all.
Me: 31, W: 29 T: 4 M: 2 Kids: 3 (SS: 7, SD: 4, D: 3) Separated, still living together: Nov 2013 Separate bedrooms: Feb 2014 W working away; kids with me: Nov 2014