I Have been reading and following this since you first posted. And my heart breaks for you, Lori, and your family.
My ex knew me when I tried to transition before. When we married she knew I was TS. And even though she knew she never understood what it meant. And it lead to so many fights that I lost count of the unhappy times. And we stayed together because of finances. No children, just the money.
It never got any better. We finally came to the last fight and we separated in the same house. We had 'Hall sex', if you understand that. If not PM me and I will explain. I don't wish to post it here.
But my point is that this will never go away, regardless of anything anyone will tell you. She is hurt because she fell in love with a 'man', married a 'man', had children by the 'man'. And now that 'man' is dying. Not so much in a physical sense, but in a psychological sense. You are still there, but you are not the same person she fell in love with. When people change, people adapt. But this is huge. And she can not adapt. She doesn't want to, period. It is a last stand for her. She is in survival mood. And I do not blame her in the least bit. She has every right to be pissed at you. But you are not the sole reason.
But you did not choose this, any more than you would have chosen cancer. It is just part of who you are. It seems to me that she is using the 'dirty little secret' to avoid facing the troubles that may occur. Your children will adapt very quickly to your transition and accept you, as long as you are there in their lives. Your wife needs to keep that in mind when thinking of the kids. The rest of the world that she is worried about can kiss off. If she stood up for you, with you and by you, they will back off.
Things can and will change. You and your family may face hard times, because of others. But you can and will overcome them, together. But if you just give up and leave, I will tell you in no uncertain terms, will be screwed without legal, really good legal advice.
Under no uncertain terms, leave and return as Aunt Lori. The kids will hate you forever, if you can even get back into their lives.
I don't envy you or your family. You face one of the hardest part of transitioning, in my mind. You and your wife must come to terms in order to survive together.
I am sorry if I sound uncaring, unfeeling, rude, crude or just a plain Bi**h. But you need to realize that you face something that will change your life, your wife's life and the children's life forever.
In another galaxy far far away, I told my 2nd ex wife of my plans to transition. She did not want my two boys around me and left the state. I never knew where they were at, but my older son finally contacted me to find out why I was not in his life. He hated me for not being there. He is slowly excepting me NOW, as his 'other Mother'. But he is still bitter about me not being there. And we are still not close. We chat in frequently.
My point, Don't just leave. You and your children will regret it of the rest of your lives. But you need to let Lori live. And the best of luck my dear Sister, for all of you.
Just My Humble Opinion,
Janet