1. Yes you are making yourself crazy
2. Yes this normal.
3. When there have been past indiscretions, it can make the process more work.
It sounds like you and your husband buckled under the default societal view that monogamy is the only way to go. I don't say that as a criticism - but as observation because we have all felt compelled to conform. Unfortunately, no matter how much your husband wanted to conform, it appears he had trouble doing so. Hence the cheating. So unfortunate. That said, I commend you for recognizing the societal pressures, and how they affected your marriage.
The first issue is that your husband did not confide in you that he wasn't up to the task of conformity. This was a huge mistake on his part. That said, people often don't recognize a situation for what it is, until it has gone too far and they have fucked up. We are all good at fooling ourselves.
The new woman sounds like she is more well-versed and was offended by his lack of honesty. Kudos to her.
As for your part, you sound like you logically understand the progression, but your emotions are not matching up. Not at all uncommon. Let me ask you this, when you bowed out tonight, did you tell them to go ahead without you? Or did you confide in them your emotional state? If it is the first example, you can't expect them to read your mind. This is unrealistic and unfair. If you told them you were troubled and they went anyway, then yes, I'd be mad as hell.