Kit, it's been working-ish - for a while but only because so many other things have been happening that it wasn't a priority to split up 'properly'. (bereavement, chronic ill health, financial nightmares, etc...). We're not in a crisis now, so we have some energy left to think about our living arrangements.
I see the nesting arrangement as a temporary thing, partly because it would be so bloody expensive. Even a little bedsit would cost upwards of £500 pcm in my city, but I guess I could see if I could rent a room from a friend. A bit depressing to be contemplating that in my 40s, but hey...
The bit of reading I've done suggests that nesting can work as a transition but not so much in the long term, particularly if one of us finds a new partner. But I can see the benefits for the children: they're not the ones who have to move and their domestic set up has a degree of stability - at least physically. But I also wonder if it's not just pulling the plaster off slowly, rather than making a clean, if painful, change. Living completely separately would mean moving into a rented tiny house (as Amicus says), but I wonder if the clarity is better for everyone. I don't know.
You asked why the current arrangement is not sustainable. I don't want to live with h any more. I like him better when we're not sharing the same space and I think our current mode of cool civility with the odd eruption of anger is not a good model for the children. He's also a recovering addict and I can see warning signs of a return to the old ways.
I've heard a really useful analogy for my situation - and maybe the other posters too. It's like we're in a holding pattern above an airport, expending loads of fuel to keep the plane in the air but not landing for various reasons: afraid, perhaps, of what the terrain will be like when we land. But we're not moving anywhere...
H wants us to divorce but doesn't want us live separately because he's the child of a horrible divorce and doesn't want to replicate his childhood experiences for our children. He wants to be woven into the fabric of their daily lives, which is brilliant in one way... but I feel so claustrophobic. It seems that our current arrangement serves his emotional needs rather than the needs of the children (or me). I've been with him my whole adult life and I just don't think we're good for each other. It's horrible to feel that I'm the one wanting to "break up the family" but we both would like new partners in the future and I can't see how that would happen while we're still basically functioning as a married couple (albeit in a completely platonic and mechanistic way).
Having said all this, I am prepared to consider giving nesting a go for a while, even though the clean break is infinitely more appealing. Link here if you're interested. www.psychologytoday.com/blog/co-parenting-after-divorce/201307/birds-nest-co-parenting-arrangements
to all of you for reading all this. Sorry you're going through this but it's really good not to feel so alone with it!