I can sympathize with your situation immensely. I'm newly poly, leaning mono, dating a poly. My situation is different though, in terms of where everyone is in life.
I agree that the number of kids and the committed situation sound like one of the reasons why someone might change from mono to poly as an escape valve. I'm not saying that's not a valid choice to make, simply analyzing the situation.
Having read the backstory, this guy sounds completely creepy like everyone says. You trusted him and your wife not to cross certain boundaries and they did. The “I could never do what you’re doing. I’d have to kill someone first” comment is throwing your lack of power back in your face. It's a total F.YOU. from my point of view.
Could you possibly have her read these forums and see that a group of well-meaning, independent people find the guy's actions to be very troubling and creepy? I'm not so naive as to think it would stop her from loving someone she loves, but it might give you some leverage in the conversation. And marital conversations are all about ammunition and leverage, if you're at cross purposes already. (That may sound jaded and a bit rude, but I'm not saying you have to be cutthroat. But no one can deny that power dynamics take place in a marriage.)
To me, if she still values her relationship with you, she wouldn't want to just jump into something that makes you uncomfortable. A lot of people on this forum will disagree with me on that. They will say that the bedrock of polyamory is being able to do whatever you want, whenever you want as long as it isn't deceitful or controlling or hurt someone else. However with a history as long as the one between the two of you, just going off and doing something antonymous isn't fair at all. You have a life built on trusting your partner. There should have been much more discussion. Not just her falling in love with someone new and forcing you to deal.
A lot of people around here will also tell you to bounce out of a relationship on a second's notice. Normally, I bend the opposite way, but in your situation, if she's just giving ultimatums and not working with you, it might be time....
Me - male, 42, poly, straight, in a serious relationship with Audrey, also casually dating.
Audrey - female, 20, poly, pansexual, also casually dating.