Hey hope, hang in. Difficult times but you'll be ok.
I understand things take time, but I'll tell you how I'd be handling things if I were in your shoes. Realize it's taken me a while to get here, I don't expect you to feel this way, but maybe it would help to hear an objective view.
The entire first paragraph is irrelevant. Your M is over. Your W is gone. You need to remove her from any part of your emotional life. Look, my STBX agreed to go back to work 9 months ago and hasn't. I'm paying support for the children which isn't enough to cover all the bills, so maybe she's getting help from her family. I don't know. Meanwhile she's living in the house, and I have all three of my children in one bedroom in an apartment while I'm working a super high intensity job. No, it's not right...but it's short term. In a year I'll buy a new house, and she'll eventually have to go back to work and reality will catch up. Or not. In the end we all get what we make for ourselves. There are plenty of people out there with money they don't deserve living in ways that aren't righteous. What's one more? Let her have her own path, just take care of yourself.
For the mediation, I have it coming up and I have a lawyer. There is no rule that you can't have representation, and when it comes to children and huge financial settlements I don't know why you wouldn't get one. The "I can't afford a L" line doesn't make sense because you can get good representation for a couple of thousand, meanwhile the difference in settlement can add up to six figures over the years. As for not wanting to 'escalate' the situation, I wouldn't worry about that, if the only way to keep things calm is to be a sucker than forget about it. There are ways you can hire a L and explain that in a non-threatening way. If your W tweaks and 'uses it against you' to her friends/family/OM good for her.
Cliff notes- do what you need to do, and don't let your emotions about her run your day or influence your decisions. Would you let the crush you had in the third grade take your children away, or ruin your life? Time to demote her to 'ex' and take care of yourself. Her choice, not yours.
Me:38 XW:38 T:11 years M:8 years Kids: S14, D11, D7 BD/Move out day: 6/17/14, D final Dec 15