This isn't a grudge, though!
He showed you that he's a flake. So you don't necessarily trust him.
That's common sense, not a grudge.
Ok he may have changed. It may have been that he was in a very different place blah blah. BUT. Really that line of argument only works if you're a pair of 22 year olds with a lot of growing up to do. He's a divorced adult with children. He should know what honesty and responsibility are, it's not rocket science. He wasn't straight with you (and you know, in your heart, that was at least partly because he had his eye on someone else at the time, was ditchering... and ended up shagging her.)
He's probably a nice decent ok guy, but no, I wouldn't be jumping to throw all my security out of the window, and that of my kids, to contemplate marrying him/setting up joint finances either!
And... you've only known him 2.5 years? Like, 30 months? Um. Even if you'd had a dream relationship and all had always been rosy, I still wouldn't be even considering making permanent financial decisions yet!
Note what I've said is ALL about the financial, really. Because when you have kids, that's the crucial thing.
You have a house. You're financially independent.
I'd say to him, with a smile - yep things are great. But no, don't even talk about marriage - it would be several years before I'd even consider it. And as for moving in together - I'm happy to think about that as it will save us both money, but to be clear- our finances are staying separate, I'm keeping my house, and just to be clear, me and my kids security is always going to come first. So if you're ultimately looking for a wifey figure, forget it.'
Honestly, in your position, I'd not even consider marrying again. There's not a massive amount in it for you and it puts your kids at greater risk if you were to end up splitting.