argh555 it sounds like you've got things pretty sorted with a flat already there for dh.
My dds are 10 and 12, they were 9 and 11 when it came out that we were separating.
Your marriage sounds similar to mine - despite wanting to not being able to make progress in the right direction. We had the same argument for years, over and over.
We didn't plan telling the kids. I'd been wanting a separation for ages, but just couldn't bring myself to insist on it and dh didn't want it. The turning point was one evening where dd2 told me she thought I didn't like her because I was always unhappy when she was around. This was like being hit in the solar plexus. She ran upstairs and I brought her down and in front of dh and dd1 told her that it was nothing to do with her, I was unhappy with dh.
After that he stopped fighting the separation. My dd1's first reaction was similar to lilacbaubles' who said:
DD1 hugged me and said 'I just want you to be happy, Mummy'
(In fact, lb, I think you might be me, even down to the details of the family home)
My dd1 said 'Everyone deserves to be happy, Mum, including you'.
Dh didn't want to move out ('why should I?') so fh went on the market and we had 8 awful months of living under the same roof, multiple house buying/selling nightmares with two properties to sell and two to buy; none of these transactions was straightforward. It was hell. Dh and I carried on sleeping in the same bed (sounds crazy but I didn't want to hurt his feelings by decamping, though I did in the last few weeks).
I got the keys to my house in August and moved in at the end of October. Fh was only sold at the end of November and dh got his house ten days ago.
When we first told the girls they didn't cry and seemed fairly accepting, but they have both told me since they cried on their own after they went to bed that night :(
It's been difficult at times. When I first got my house, dd1 didn't want to come here (dh was still in fh for a month after I moved in here). It was very painful that she didn't want to be here. Dd2 was more chirpy about it all, on the surface. They've both been a bit unsettled and quicker to cry about small things.
But things are settling down now. My new house is home for the three of us. Dh has his house and though he didn't like it at first, he's finally had the girls staying there and they are enthusiastic about it and planning their rooms.
We all spent Christmas together - at my house - me, the girls and dh with my parents and brother and it was really lovely.
My relationship with the girls has improved massively as I am so much less anxious and stressed out not living with dh. I am so happy and glad I did this, and dh and I are getting on better all the time. We bought Xmas presents for them jointly (and we bought nice presents for each other as well!)
The girls are still doing really well at school, having a nice time with their friends and I feel closer to them and I think they value their improved relationship with me (it was never bad, but I was miserable and distracted for such a long time). Most of our friends have been wonderful to both of us. Some have 'taken sides', mostly his. He has played the victim a bit. I got no Christmas cards from his family.
I have been absolutely generous with dh regarding time with them and have always treated him with courtesy and consideration. I think his big anxiety was that he would feel frozen out of the family unit, but I have done as much as I can to promote his relationship with them. I think he appreciates this, is becoming more relaxed and as a result is being nicer to (and feeling more positively towards) me.
I felt so awful about 'breaking up the family', but I feel so much brighter about the future. Neither dh nor I has bad-mouthed the other. He is quite EA and when I realised earlier that he was playing the victim to them a bit I pulled him up on it. I am still carrying a fair bit of guilt myself, but Christmas really helped because it was great.
I've been open with them and let them talk if they've wanted to but not pushed them.
Sorry for the long post, but this is all very recent and my kids are the same age so I thought it might help.
You are doing the right thing. Expect a few difficult weeks or even months, but things will calm down and a new 'normal' will emerge. I'm confident that my kids will not be damaged in the longer term and will actually benefit from having a happier mum and, eventually, dad, and not living in a house full of tension.
Oh, and like Mushroom I found the times they weren't with me really hard - and really strange - at first. I thought, what the fuck have I done? But now I am enjoying it more, finding time to do things for me, decorating my new home, studying etc.
It's amazing how quickly things adjust, a new place starts feeling like home etc. People say that children are very adaptable and they are.
Good luck x