Also, why would you be the one to leave? Can she cope with the children, can you? How old are they and what would be the impact on them if they are left in her care? Do you have support and can be their protective factor?
I just want to say, "Amen". You're the one that those kids need, man.
This post resonates a lot with me, as the personality sounds rather similar to my ex, who was certainly hypersexual, which of course was AMAZING when things were good, but was awful when things were not good. She talked loosely at times about having an open relationship, or going to swingers' parties. I'm pretty open-minded, I think, but not emotionally set up for all that. She never followed through on those suggestions, but that suggestion, along with all the other madness was enough for me to go through several long periods when I was so nervous about everything that I simply wasn't able to
perform, and of course I got a lot of abuse for that. I went to psychosexual therapy, and found that very helpful in persuading me that my sexual competence wasn't the issue. Now I completely understand what was going on, and I have absolutely forgiven myself for that at least. In fact I think that I'm probably more sexually confident than I've ever been (albeit that I haven't yet dipped my toes in those waters - I'm pretty fussy in my choices, and still healing in any case so just not ready).
She needs to understand that you have limits, and that if she goes beyond those limits you will consider pulling the plug, and taking the kids with you. Easy for me to say, sitting where I am, very much looking back on it all now. Also, we didn't get close to having kids, maybe because we're both over 40 and one of us is no longer productive. I don't know. We never got around to checking properly - too much other crazy stuff going on. She blamed me for the fact that she wasn't getting pregnant, but I thank God now that it didn't happen, because I can of course imagine how crazy it would have been.
I really regret not ever having had children in my life, but am absolutely sure that it would have been a nightmare with her, and ultimately unfair to the children, which is what really counts. I don't know if I would have had the strength to be the guy who took custody of the children away from an "incompetent" mother, but I think that that is probably the situation that you are in. I have a friend who was in pretty much exactly your situation. He went through a very difficult time, but ultimately got custody of their daughter, and is now happily remarried. I'm not saying that that is what you must do, just pointing out how things could be in an alternative scenario which you should at least be thinking about.