RD, I've posted before as to how much I relate to your situation. So much of what you write applies directly to my life as well. It's exhausting.

I also believe my DH is borderline, but more recently have been considering covert passive aggressive narcissist - or maybe somewhere in between those two things.

About a year ago I realized I was so invested in him, his life, his problems, my want for something that might not be (the guy I remember to go back to being that guy), that I'd literally lost track of my life. Someone told me that living with someone like my husband, it is very difficult not to end up codependent. Particularly true if you are a loving empathetic person. I've since learned the power of detachment among other things and life is so much better, at least for me. It still stinks a lot of days, but at least I have my equilibrium most of the time. I'm still compassionate towards him, I just don't get sucked into his garbage and let whatever he throws out to remain in his space. Last night he made a very provakative comment that I was not worth talking to- I just let it slide, the way you would with a tantrumming four year old. I ain't picking up what he's putting down, kwim? The more I do this, the more he seems to try very hard to go back to more of the person he use to be. Weird huh? Not really. Borderline behaviors when they fear they are no longer in control of you.

I don't think your kids would be better off elsewhere. You are a very attuned person and there is no one better to be there for them than you. I just finished reading a book about covert passive aggressive narcissists and there's some talk in there about actually sharing with and involving children at an age appropriate level. The concept being that the CPAN parent is not normal and the children should not be left to think that what the disordered parent does is normal or acceptable. This has been my thought with my kid all along. A few days ago she was talking to me about him and I made an offhand comments that sometimes I think he starts acting nice when he wants something. She rolled her eyes and said. "uh huh," as though she's figured that out long ago. Anyway, given the oddity of your individual situation, no one else is going to be able to provide the guidance that you can. For me, that guidance also involves getting me healthier and emotionally separated from him to show her that I am an individual deserving of respect and appropriate treatment and a life of my own. Don't forget that you deserve that too.
.
Anyway brother, keep on keeping on, and do take care of yourself. As much as you love your wife, you should love yourself even more. You deserve it.