Hi Mickey,
There are still a few things here that don't add up to me. Your wife says she loves you but "she believes that she can just drop the relationship and go if this doesn't resolve. She does NOT want this subject to come up anymore AT ALL and she has told me she can't take it."
Well, honey, that's not love. "My way or the highway" is not love. Giving ultimatums is not love. I have a transgender friend who went through transition with her wife about ten years ago, and it was, according to her, extremely hard for both of them. They have three children together. Her wife told me, "I loved James (her dead name), and I still love that person. That person is still there." Ultimately they worked it out and they are still together, and they are a beautiful couple, going on 30 years of marriage. That's love.
The other thing that I just can't get is a woman walking away from her children. I have never met a woman who wouldn't die for her children, who doesn't put the welfare of her kids at the absolute top of her priorities. It's how I feel, supposedly raised as "a guy", and it's just alien to me that there are women who don't think that way.
So, again, playing amateur psychologist, it seems like there is something in the room besides your transition. Why is it she won't even TALK to you about this, an issue that is ripping your soul apart? What if you had a gambling addiction, or drug habit, or cheated on her? Would she talk about that, try to fix things? Or is it, "I'm outta here"?
If your wife won't help your marriage, it's not a good thing. Go see your therapist and at least try to help yourself and your kids.
With kindness,
Terri