Amy - I for one am not going to flame you. I remember your posts on another thread and the thing I admired most about you then was your honesty - that until OM came along, you had thought that you were "happy". You are not doing that "re-writing history" thing that so many people in affairs do.
It looks like an unholy mess at the moment, but I sense what you're looking for is clarity.
A few things strike me from your posts. You mention your Father's death and the "live for today" feelings it left you with, but I suspect there are other issues surrounding his death that as yet are unacknowledged. Deaths of parents are recognised as a catalyst for affairs, so one of the first things I'm going to advise is that you consider some bereavement counselling.
The second thing is for you to see some unpleasant facts about your situation. I know you will baulk at the notion of "playing", but please consider this and bear with me. At the moment, you are idealising OM, which is understandable and of course, he is playing to win here. He loves you, wants you and is therefore playing a "blinder" in that he is exerting no pressure, appears to understand your turmoil etc.
However, the truth here is that you cannot know the real him yet - it is entirely possible that he will turn out to be selfish, lazy, manipulative and a whole host of other things, once life settles down, the crisis is over and he has "won".
You mention that you believe yourself to be selfish, but please see that OM is also being very selfish here. The unselfish thing to have done in his position would have been to acknowledge the attraction between you - and withdrawn completely - what he did in effect was to deliver a death knell to a marriage that needed shaking up, but was not irrepairable.
Very often, the reasons that relationships borne out of affairs do not survive is because the very behaviour that caused the affair to happen (deceit, selfishness, abuse of spouse) emerge again in the new relationship.
The other issue is that at the moment, your husband is not playing to win because he has no idea he is in a competition. This is a grossly unfair, un-level playing field. However, never under-estimate the corrosive damage you are doing to him - it is insidious and IS affecting him in a myriad of ways. He probably knows something is wrong, since he knows you very well. He can't think what it is, so he's trying to find ways to "fix it" (i.e. giving up working away etc.). But he is suffering, believe me.
The most noble thing you could ever do in this situation would be to tell your husband that you are having such major doubts about your marriage - and that these have been created in the main, by the arrival of the other man. However, as a pragmatist, I understand that to you, that could mean burning your boats before you are ready. So at the very least, can you tell your H that you have grave doubts about the marriage and are thinking of separating? This at least gives him the opportunity to realise how imperilled he is - and to make some changes?
In fairness to him, while you are letting him make those changes, could you insist on a "no contact" rule with the OM? If he loves you, he will understand this and will wait for your decision. This will be very hard, I know - and for a while you will grieve his loss, but you really do need to see how much of this marriage is salvageable before you wave it farewell. If you will bear with me a little longer with the competition analogy - the OM has had his time to pitch for you - now it is your husband's. If you find that some feelings for H really are returning, then at some point I would tell him about this affair. Secrets destroy intimacy and for your marriage to reach its true potential, real honesty is needed, if not at first, then later.
I imagine that for you, prior to OM turning up, all you wished for was that you and your H rediscovered your feelings for eachother and enjoyed a revived relationship now that the children were getting older. The children's welfare is clearly a priority for you and I sense you believe as I do that children want most for their parents to be together and to be happy.
You might therefore get what you wanted in the end - a revitalised marriage and very happy children, but it means being very rational now and very fair to everyone involved.
If after this period of OM being totally out of the picture, you decide that nothing can revive your feelings, then at least you can look back and say you tried to do the right thing, that you made such a life-changing decision after much thought and considerable effort. Your H and the children will still hurt, but will ultimately respect you for the efforts you have made.
Also do bear in mind that very often, female responses to affairs differ - this is not biological but conditioning, I'm afraid. Women often convince themselves that the affair partner is their soul mate and that their marriage must be doomed to failure if they are having an affair. The truth is far more complex - very often women's reasons for affairs are no different to men's. They are in a passably happy marriage, but after so many years together it has got a bit dull. They don't feel adored, desired and respected by their spouse and along comes someone who is offering all that - plus "different" sex. It's no wonder the effect is so enormous, but it doesn't have to mean that the marriage is doomed or that the affair partner is the solution.