I'm sorry the conversation had some low points for you. What a blow that must feel like!
But I don't think this is a death-sentence for your M at all.
In fact, I second Wonka's suggestion to move forward firmly and with resolve. Your W asked for something. Give it to her. But this is the beginning of you really putting your money where your mouth is on those boundaries.
I think your wife has some demons that she needs to work through on her own.
Back out, and let go in love.
As HS repeatedly told me, let the OP be there to meet alllllllll your W's needs. Let's see how long he remains her BFF when she turns her frustrations and lashings-out on HIM because ol' Dev got wise and went underground. With your W's current state of mind, she HAS to lash out at someone. Question, though: are you at all concerned that, in her current mindset and especially after the things she's said about your kids, she'd start lashing out at THEM if you weren't there to absorb it?
Definitely know - though it doesn't help - that this is not the woman you married. And she's telling you (though she likely doesn't realize it) that she's really, really messed up in the head right now. Typical WAS. But your W is actually being very vocal about it instead of completely shutting down toward you.
I think she is very confused and torn. She's essentially telling you that.
Now is the time for that crazy, hardcore, counterintuitive stuff. It's not going to feel "right" - and certainly not easy - but giving her the space she's asked for is going to be best for both of you right now. And it will give her time to think while not having ANY reason to continue to direct her anger toward you.
Have you read "His Needs Her Needs"? HS suggested it to me, and it has been invaluable. One thing (if I remember correctly) it mentions is that going dark allows you to step back after you've given your W some warm memories of you. If she has noticed your 180s and your new-found patience, leave her with that memory for a while. By staying in her life and being her whipping post - and perhaps your reacting to that in a way that isn't pleasing to her - you continue taking a chance on making withdrawals from her "Love Bank." Going dark, in other words, leaves her with a good, positive picture of you. Your "account" in her Love Bank will hold steady while you're dark.
Proudly coining myself a member of Dev's Posse tonight.
You impress me every day, Dev. Stand tall.
M: 40 H: 44 Married 14 years S11 & D6; D20 & D19 from previous M 2BDs/PAs, 8 years apart Piecing: April 2014