Why do you have to be a part of it? Why does everyone have to be "in it together" from the stand point of sex? Can it not morph into something different and more fitting for now... ?
You have said a few things here that I am going to repeat as I have known you for a long time... you started writing on here at the same time I did. You were one of the reasons I became addicted to this forum!
Sure you took a long break, but in hearing what you are saying coming back it sounds like there have been changes. When you came into this it was because the four of you decided that you wanted to be family... you decided over a night of drinking lemondrops... remember? You loved that your kids could be together, that you could home school together... I remember all that. All good intentions but over the course of a year things change as you settled into it all after the NRE with each other and with poly.
There is no reason that I can see that it should stay the same. nothing stays the same. You have discovered that you are not into certain things and that one of you isn't all that into poly and that two of you are into sexual activities that the others aren't etc. So talk about it... this is the time to be honest and lay aside time to update each other. Otherwise the whole year of creating a life together, that includes your kids as well, will blow apart. This is where resentment starts settling in, where communication begins to erode and little bits of information get left out.
I see absolutely nothing wrong with changing your quad into a vee or a triad. What would be wrong with that? You haven't failed, just that things have changed and the cards have fallen where they are suppose to of fallen. You are allowed to make your own boundaries and guidelines with this, remember?
It worries me that you feel the need to be involved every time and that your husband is saying you have to be. Its a red flag to me. You've seen it all before, them having sex I mean, what difference would it make to the negative, if you are there or not... the difference would be that they can finally explore each other in private. Something that is an important need we all have, privacy. The other would be that you would gain some confidence in the fact that he loves you and so does she. I would suggest walking through that feeling you get when you imagine them together alone and see what the other side looks like. I would bet that you will see that the change is for the better, rather than for the worse.