Rip,

It does not have to be ugly. You need to know that how W reacts is all ON HER. You are not responsible for how she behaves or react when you calmly state your boundary. You are paralyzed by fear.

Fear of her reaction. Which is weird since she's already fired you as a H. You've "lost" W to speak.

Telling her that you don't want a D, but won't stand in her way communicates to her your position and you are not getting in her way. See the difference?

Yes, continuing with LRT is the way to go. Don't do any activities together...with kids, or alone together.

You do need to take charge of your finances. Otherwise she could very well clean out all the accounts.