From a medical professional perspective you need to do a few things if you haven't already.
1. Get your intermitent FMLA forms from YOUR employer, and get them filled out pronto. For care of a family member. This allows you to take time off when you need to care for her without concern of loosing your job.
2. Is she still competent? If so get it documented by a Dr. Then make sure you have the forms filled out and ready for her signature (probably means a trip to the attorney's office) to get all her assests placed into a trust, or that you get them upon her death. This protects you and the kiddos. This of course includes any 401k's, life insurance policies etc. Also have a health directive filled out, ONLY if she has made you her primary decision maker. If not then DO NOT do it. Legally your are married, and decisions fall to you for her health care, if she doesn't have a health directive stating otherwise.
3. Talk to the Dr's about palliative medicine. This is a highly underused method of healthcare that will give you some extra support. She knows she is terminal, you know she is not curable. Change the focus from get well to get quality from the time left. (Not quite the same as hospice, as you will still do things like go to the hospital if needed etc). Insurance helps with this, and you will get some Home Care help, that will be a huge support for you as her health declines, and when it's time to transition to hospice it will be seemless.
As I see it, I don't think this is something that you are going to resolve, or find peace with. This just a plain shitty thing to have happen to you. I would not agree to D. I would also strongly recommend that you and OM have a long conversation about him destroying your family, and ask for a cease and desist immediately. He may not agree, as they both feel they are in lurrrve. IF that is the case, then I would make damn sure that he has limited access to her as she declines in health. I'm sure Mr fantasyland, unicorns and rainbows isn't prepared to wipe her rear, feed her, and provide care to her if he isn't getting anything out of it.
Your wife has made her choices, and has her own deamons to deal with, just know that her choices are just that her choices. There is nothing that you could do/ or could have done that would have prevented this.