I am really glad to hear of what I thought was a very productive sit-down between the three of you. I know it might seem as if nothing technically changed; however, I think it was cathartic for all three of you (especially your husband and your ex) to express how they feel and be truly candid with each other about where they stood and how important the kids are in the equation. I feel as if the three of you are on the same page now and have a peaceful agreement to try to live together in harmony.
I feel that you should continue to schedule sit-downs, as time and opportunity allow. You never know when issues may pop up here and there and when they do, you'll want to nip them in the bud.
It's great news that the ex is doing better (probably largely thanks to her meds -- and to her for being willing to take them), and has been mostly keeping it together compared to her bad habits in the past.
I think if you can hold steady with the relative peace accord the three of you now formally have, and if you can exercise much patience as months and years go by, you may actually see a gradual melting in the wall of ice between your husband and his ex. I think your husband's trust is hurt so badly that he just can't even think of such a melting right now. But the day may yet come when the relative peace builds up sufficient to soften his heart towards her.
In the meantime, the agreement you currently have seems propitious and workable. You have something of an "emotional V," and a "sexual triad." Which is interesting and also totally fine, because it's something the three of you find adequate for yourselves and each other. It's at least good enough for now, and who knows, maybe it'll get to feeling increasingly comfortable just as it is over time. I personally think that would make a happy enough ending too.
I am glad that all three of you are watching over the kids and watching out for their best interests. It speaks well of the three of you; parenting is such a huge responsibility and must never be forgotten. You are right: A good example is possibly the best of all gifts that you can give to the children.
Anyway, thanks for your update, and I hope you'll keep chiming in whenever you can to let us know how things are coming along.
Love means never having to say, "Put down that meat cleaver!"