OT, you rock. That is some REALLY good stuff and as much as I try to help folks around here, I just can't seem to nail it like you do.
My only thought I want to add is that you (OT) keep coming back to that idea that we LBS try to be in a relationship that doesn't exist. Well, to be fair to us LBS's here and NM in particular, the WAS tend to get us all twisted around so that through their visible actions and words to us, they get us to BELIEVE we are in the kind of R that ML and other things are possible with. We are led to believe that they are being truthful and honorable about the aspects of the R that are important to us in this respect and so we act on that belief. It's only when these things happen like what happened with the kid(s) and OW that we realize that we've been had. Of course, we're naive to believe in these things to start but I have to think that comes from OUR misguided attempt at being "good" people.
I think that's why I like your post so much because you then go on to talk about deciding what level of trust to afford the WAS and on what subjects. I think, obviously, this level of trust defines what is then possible in the R and for NM, I think her trust level just dropped a few notches and thus, so too did the level of their relationship.
NM, it sucks to get so far up and then have the ladder yanked from under you. I really feel for you and suspect that something like that is possible with my sitch. I hope you can get through this and still maintain the great work on YOU that you have been doing lately.
As usual, listen to OT and implement as much as you can.