If she finds looking after the kids so difficult then she isn't likely to want to become the primary carer. I presume that is why she doesn't want you to leave the house. She is frightened of having to care for the children on a full-time basis and not having the evenings to herself anymore.
That could easily be solved with mediation. You could arrange that she drops them off at yours when you get home from work (if this is what you want) 3 days out of 5 and then you could have them alternate weekends.
You two splitting up is not the end of the world for the children, they are far more likely to be affected by two very unhappy parents who live together, than two happy parents who have separated.
Dh's brother was thrown out of his home 9 years into his marriage because his wife had decided that she never really loved him after all and she was after someone else (she got knocked back in the end). Like your wife though, although she loved her kids they got in the way of her social life.
Dh's brother moved back in with his parents and built himself an apartment in one of the barns (they live on a farm). He would have the children almost every weekend and certainly every school holiday. They now have clothes, toys and other things that stay in dad's flat and their other things with mum. But both children have been surrounded by love from their grandparents and dad - who never criticises their mother in front of them, sadly she has failed to repay the favour. I won't pretend it didn't affect them, but everyone is now happy with the arrangement.
Like you their dad didn't want to be absent in their lives and although their mum has used access to them as blackmail, he has managed to call her bluff as he knows she needs him to look after them whilst she goes off and has fun.
In your case I would say that things are much better than that as your and your wife are still communicating.
I would urge you to seek mediation. You can discuss plans with someone who is neutral and hopefully get some decisions made because neither of you can live in some kind of limbo-land. Your children also need you to make a decision because even though you are putting on brave faces, children do pick up very quickly on atmospheres and tenseness and yours will know there is something up. Be honest with them or they'll be left wondering if it is something they've done.
You can move on from this successfully and find an arrangement that suits you both, but one of you is going to have to make that first move. Please do contact your nearest Family Mediation Service.