robert,

This living situation is highly unhealthy not only for you but especially the children.  You are setting an example of your willingness to be abused,  put up with infidelity and financially enable her to do all this.  You are playing the victim.  If you have a son then he will see you as the model of what it is to be a man.  If you have a daughter, she will see your wife as the model of how to treat a man.

I believe a lot of parents think they are doing the right thing by keeping the family together, not changing their situation.  Rarely they look at the long term impact on children.  There is a trade off between stability and handling an unhealthy situation by experiencing some pain and disruption.

Mark