Tim, I'm the LD (lower desire) wife in my marriage, and I DISAGREE that your wife knew that your intention was to make love simply because you were cuddling with her and caressing her.
My interpretation, based only on my own feelings and past experience, is that cuddling and caressing in and of themselves are very pleasurable and relaxing and aren't necessarily preludes to sex. Back in my late teens, even when I made it clear to my boyfriend that I wouldn't have sex for fear of pregnancy until I went away to college and could get BC pills at the health center, he still enjoyed caressing my body, so I was used to that without it leading to ML. Even after going on the pill and later getting married, my boyfriends and then my husband enjoyed touching and caressing my body while watching TV or at the movies without it leading to sex (and it's important to remember that erogenous zones are not confined to the genitals and breasts). In other words, caressing and cuddling don't always equate to foreplay for sex.
In fact, about the only time caressing and cuddling leads directly to ML is when we're in bed already or there's been some other indication from him (words, partially undressing me, oral and/or manual stimulation "down there", etc.) that he wants to ML. We're now ML about 5 times a week because of Michele's advice in TSSM, but we've figured out our own system of communication (direct words, code words, or certain touches or other nonverbal communication) where he lets me know that he would like to ML or would like me to initiate.
My advice, as one anonymous stranger to another, would be to give your wife the benefit of the doubt and accept her explanation at face value. Then, take Michele's advice that if at first you don't succeed, then try something different (perhaps adding some direct or indirect verbal expressions that you want to ML with her while caressing her). One other thing that I've discovered is that I'm more likely to really get into ML if I'm focused entirely on ML and my husband without distractions such as the TV, kids, worries that somebody will walk in on us, etc. Conversely, if there are other distractions, I'm not focused on sex.
Even if you're on the right track, you'll get run over if you just sit there. Will Rogers
To love at all is to be vulnerable. Love anything, and your heart will certainly be wrung and possibly be broken. C. S. Lewis