I recall reading earlier there isn't a D/s dynamic in your relationship. I only mention it, because I found the way the BDSM world defines boundaries so useful in normal life.
Hard limits are boundaries that are simply non-negotiable (and we all have them).
Soft limits may be negotiable in the right circumstances.
It sounds to me as though your wife may be struggling on establishing what the difference is-not only regarding your limits, but also her own.
It is VERY good that you have taken time alone to figure some of that out for yourself.
It would also be VERY good to make the offer (even if she refuses) to take the kids off her hands and allow her that opportunity.
The counselor is highly likely to be doing just that (establishing the base issues). If they didn't, they would be wasting their time and yours.
But-yes, the topics all pervasively affect the kids.
In problem solving, its helpful to establish the most important goal.
Which is why I advised prioritizing the kid topic.
It helps to align all of the extraneous aspects of the issue into a workable equation. Like..... Altering a system of algebraic equations into row-echelon form before trying to solve for x,y, and z.
If the best interests of the kids is the first goal, then all of the solutions are first measured against that criteria.
Do you read (non-fiction) at all?
"Love As Thou Wilt"