Your wife is an alcoholic. Severe crisis you describe, or whatever you call it, is a behavior of an addict. She also needs an evaluation for potential personality disorder. Her memory glitches could be alcohol induced as well as skillful manipulation. None of that excuses her outrageous behaviors though

She also created a situation where you can never leave as she is fully dependent on you and you’d have to support two households. If there was no you, she’d be forced to get and keep a job like the rest of us. She’s not on disability (which she probably knows she’d not qualify for). And at this point knowing about possibility of divorce, she’ll be sure to never work or apply for disability because that might make it easier for you to leave or might make alimony smaller. No way. She’d be moping on a couch from now on forward. She knows what she’s doing. Making sure you can never leave

Your children sound very responsible and wise in this situation. Living in turmoil and chaos and now being dragged in a middle of your marriage they are the only ones maintaining sanity.

Do you have any family members or friends who can take care of your kids removing them from your home? The adult child can’t really take care of the young ones. Although it sounds like he’d do a good job, he sounds very responsible. You don’t want to leave her, fine, don’t. But get the kids out of your household please.