A few observations here:
1) If you haven't already, buy the book "How to help your spouse heal from your affair". It's a short read. You can get it from Amazon by clicking the shop now link on the left.
2) The advice my BW got after the last DDay was to pack up all my stuff in hefty bags (or scatter it across the lawn), and FTG and never look back. I'm glad she hasn't. My point is that what matters is what you think and what he thinks, not what Mom thinks. His mom is going to want what's best for him, but it's really him that needs to figure that out.
3) You can sleep in separate rooms for a while. You can even get a short term apartment and live there. Or he can. And so forth. That doesn't mean things are necessarily over. The more threads you read here in the wayward forum the more you'll see that nothing is written in stone. Folks have even gotten remarried after being divorced.
4)
He still tells me I have nothing to offer him...that I'm not capable & never was. He feels our whole marriage was a sham & doubts my love for the kids.
This is normal. His words are coming from a place of hurting, sadness, and anger. Like you his emotions are all over the place. One moment he might be talking divorce, the next you might be having sex. That's why it's really important to give it time. General consensus around here is to give it 6 months. You've been married for 14 years and have 3 young kids, what's another 6 months. And if he really feels you have nothing to offer him, then you haven't really lost that much time in the grand scheme of things.
5)
the looming possibility that the OM's wife will get back in touch w/ my husband again for more details and more questions ---torture for me, and deeper torment and reason for my husband to not want to reconcile.
The key to healing your marriage, your husband, and yourself, is empathy. Now more than ever you have to open yourself up and be vulnerable. The more details the BS has the better they can heal - not knowing can cause more mind games for the BS than knowing. In fact, the folks who stand the best chances of recovery, are the ones who proactively offer up as much info as possible. Write out a detailed timeline about where you were, and what you did (leaving out only the goriest of details unless he asks for them). Leave no room for him to doubt whether he has the whole truth or the whole story. Offer to take a lie detector test if need be. Give him all your passwords to anything electronic.
Get comfortable being uncomfortable, and be humble in all that you do or all that you're asked. If he doesn't want to talk one day, you give him space. If he does, you answer all his questions calmly, even if they're the same questions you've already been asked.
You're in for a long road, regardless, so strap in. Keep reading and posting - start with all the articles in The Healing Library in the yellow box up top.
No disrespect to my IC, who was a very good listener and somewhat insightful, but it was really all the good folks here at SI that I credit with saving my soul and asking me the tough questions. In many ways this journey is less about your marriage and more about you. You have to be able to look at yourself in the mirror again and be proud of what you see, regardless of what else happens. Regardless of what else happens you still have to be a good parent to those precious kids of yours. So start digging. As you do the hard work of introspection you will eventually find your peace. In the meanwhile, make time for yourself to relax. Take baths, walks, massages, do something different. I let my shame and depression really consume me in the beginning. I even bought a zen garden for my desk to move sand around.
Good luck, and welcome. You're in good company.