You can't enter into relationships with the expectation that the other person will change. She's told you what she's comfortable with. The question you have to answer is if you think you could ever accept the level of intimacy she's willing to offer.
Take EVERYTHING else out of the equation (kids, husbands, families), if this were a new relationship you were starting, and this person told you they didn't want it to go any further, would you continue with the relationship, pining away for something deeper that may never happen?
Personally, I think you're setting yourself up for a long drawn out heartbreak, and in the long run it's healthier for you to cut your losses now.
Me: 48 - Married, straight, male
Shiela: My wife.
Suzanne: My FWB
Adam: Shiela's LDR