Eagle, I feel that your W's unresolved issues from her past could play a big part in her current actions. Even if she has an excellent therapist, it could take a while before she comes to terms with the things that happened to her.
If I thought she was the typical (if there is such) WW, I would be all over this, telling you how to deal with her. I honestly don't know what to advise in this case (except to protect the children). I believe there is much more than waywardness going on with your W.
I encourage you to call and talk to a DB Coach about your situation.
In the meantime, you may want to consider moving your story to the Midlife Crisis section in the forum. This may not be the same thing, but I feel the approach you take would be similar to the spouse that has a MLC W.
I'm not trying to run you away from Newcomers, but you might receive confusing advice for your particular stitch. That's just my personal opinion.
I am so sorry for you, your W, and the children.
It is not about what you feel should work in your M. It is about doing the work that gets the right results. Do what works!