1. Sounds like your wife is either having an affair OR is emotionally connecting with the OM.
2. Let her move out. This shows the kids who is moving out AND it makes the consequences real for her.
3. Go see a lawyer ASAP, just to make sure you are protecting your own interests. This doesn't mean you need to file for divorce, but you need to position yourself well in case the divorce happens. If she gets a better job (3/4 your salary), and moves out, she is at a less advantageous position re child support and maintenance (alimony). DO THIS RIGHT AWAY!
4. She's getting mean, cranky and erratic. This is often "script" behavior for someone having an affair. May just be WAW behavior. You need to be cordial, and enforce your boundaries. But you don't have to be "nice" or emotionally available for her.