I read this OP and was so inspired at first, then I read that you are not using your veto power (it sounds like you have some?), then I read it had only been a day or so...
what a roller coaster.
I feel very strongly about cheating... I wrote a lot about it earlier on in my posts, if you care to seek it out. I love your first few paragraphs and I do hope you tagger this thread "cheating" so that others can find it... so full of good stuff that makes sense!
I think if this were my husband I would be vetoing until further notice. Cheating has a trickle down effect that I, personally will not accept EVER! It has destroyed certain parts of my trust of Mono without it even being a part of the relationship we have... what he did before influences what we have now. It rears it's ugly head every now and then and I am reminded of what he is capable of. I hate that, but it is what it is and we deal with it.
If I wasn't sure that he is a changed man on many levels than he used to be I would never of gotten into a relationship with him. The fact that I love him so much is to his benefit too; an instant love that made my heart soften enough to see if he has integrity and strength of character now that he has worked on himself so much. He has
My point is that her cheating with this man will eventually trickle down to you. In the form of; your relationship with your husband decaying, accidentally slipping up in some way that she is having an affair, boyfriend finding out and going on a rampage, who knows, but it will. Now you are holding her secret and she is asking you too, just by the mere fact that she is in your life. I would be plenty angry with that and would have no problem telling her that.
As far as I am concerned you have every right to ban her entirely from your life until such time as she gets her act together and okays it with her boyfriend. Husband will quite possibly be mad as hell at you, but if you stand your ground he will see that it is your relationships with him that you are thinking of and his best interest in mind that you are acting so strongly.
Tough days ahead... but the sooner you act, the stronger you act, the better a point you will make and the quicker your husband will end it and the quicker she will either do something about her cheating, stay away or broach the situation with her boyfriend and things be fine.
Your strength of conviction on this could be a real gift to her that she will never forget. Not only that it could very well be passed on to her boyfriend in the form of protecting his interest and heart from being damaged as so many peoples are. The biggest gift may just be to you and your husband that you care so much for him and what you have that you are wiling to put your foot down and demand he give her up.... I did this to my husband (for different reasons) and it bonded us in trust like nothing else has.