For what its worth, I don't even think this is a question. You have to think of the safety and the well being of your children first. If you weren't separated and she did this, you would still limit her exposure to the kids, right? You can do your best to reassure her and make sure she has generous supervised visitation with them, but her feelings right now are not going to be rational no matter what.
I'm not sure what your relationship is with your In-Laws - but I would certainly reach out to them and make surethey understand that you view this as temporary situation until you are confident that your wife has regained her mental health. That may help a little.
Good Luck. You are in a difficult situation, but your kids need you to be a strong father and advocate right now.
