Hi Mozza, I hope someone smart answers your question.
In my opinion, at this time distant friendliness - aka neighbor - is probably best.
If your W has you as a buddy she won't need to miss you. She can have her "romantic love" with the OM and still keep you around to chat with over email or whatever.
I say cut out the buddy stuff. People told me this for a long time but I didn't listen. I finally did it and I feel better! I'm not enabling him to have his fantasy life AND me too. My situation is similar to yours in that my WAH is searching for that consuming romantic crush obsession love feeling which is unrealistic in a long term healthy relationship. He is discovering this but is he coming back to me? No. He keeps me as a buddy and continues his search. Don't make my mistake, protect yourself and give her a chance to miss you.
Of course be polite and cordial when you see her - be friendly. But don't be friends!
Stuff like "hi! nice to see you. how are you? that's great! got to run!" Not "I saw this on TV and isn't it hilarious? ha ha ha" or "let's have lunch together next week!"
Sometimes I imagine it like I have a new boyfriend and he doesn't want me to engage with the ex. So I be polite but cut it short.
That's my advice, but maybe someone else has a better idea.
