Abney,
Well done is sounds like you really handled yourself well last night, I bet he was squirming in his pants!!
I agree with what other posters have said in regards to what he has told you. While I know and understand how it may seem believable to you that he didn't sleep with her, I would think that he can't even admit this to himself yet never mind admit it you....so he may well seem very believable on this front because he is in self denial about his own actions/feelings.
I really do think he has slept with (so sorry) especially since he says he thinks he loves her!!! I know of no man who thinks he loves a woman (especially a married/attached man) with out having had sex with said woman. Men respond to the physical and in most cases its the physical that drives them, the emotional connection comes as secondary to that. I think she must have satisfied him in some sexual sense for him to feel he has an emotional connection strong enough that to think that he loves her!!!
At any rate even if he has not cheated in the penis in vagina sense he has cheated in spirit, he has cheated in his mind, he has cheated in his heart. So even if he hasn't had sex with her, he has wanted to, he has imagined and fantasized about it, and he has stayed over at her house and resisted all these urges and his fantasy of her??!!!
He is a liar sweet, and I am deeply sorry because the previous two paragraphs must have been difficult and hurtful to read. It hurts I know and it makes you feel desperate and hopeless in ways you have never known. Rest assured you did not cause this, your are in no way to blame, do not listen to one ounce of 'he didn't feel love from your for years'!! My arse!!! Every moment you were looking after your children was loving him, was supporting him...why...because they are his children too. Every time you did something as simple as iron a shirt, make him a cup of tea, cook him his dinner and support him was love!! Love is more than a cheap thrill and thinking you love somebody because you've watched them bend suggestively over the filing cabinets at work and have a few saucy moments!!! IDIOT!
All that being said, I greatly respect how you want to handle things for the sake of the kids. I understand if having him leave is not what you feel is right for your children then at the very least I would suggest the following:
Define a clear boundary between you, if you don't have a spare room then make sure he sleeps on the sofa and put his essentials...clothing, toiletries somewhere other than your bedroom so that he doesn't have any excuse to be invading your space.
He has to realize how serious this is, and he needs to understand that a few sorry's and cups of tea and being extra nice for a while are not going to make this go away. Make the bedroom your space, make it off limits to him, use it as your sanctuary to think, get space, cry whatever you need it to be. Don't get trapped into letting it go back to the 'usual' because is really easy to start of by just keep up the pretense for the sake of the kids/others and then ending up just having slid back into the normal routine. All that will happen then, is he will think he got away with it and be happy as larry thinking he's had a close shave. While you, on the other hand will be burning from the inside out with anger, resentment and insecurity.
You are a brave brave woman, and have handled yourself with class and dignity. Remember there is no shame in wanting to try and work things out with him, there is no shame in wanting him to be sorry and to beg for forgiveness, there is no shame in hoping/wanting to fight for him/your relationship/your family. Equally there is no shame in letting him go and ending things because repairing a relationship when the trust has been so badly broken is incredibly hard. Sometimes you have to accept that you will never get over something, cut your losses and move on. Neither path is an easy road to take but....whatever you do....if you decide to let him work it out with you, if you decide to give him a second chance...just make sure that you MAKE HIM WORK REALLY HARD FOR IT!!!
Take your time, work out what you want and what is best for you.