Yankees,
As others have said, you are doing really well in difficult circumstances. Emotionally, you never left the marriage, and you are a decent guy, so of course you can’t stand to see your wife cry without offering a bit of comfort. I think the majority of people here can identify with the feeling of being caught in the middle; it’s what turns these things into an emotional rollercoaster. It is like we are living with two people in one; pre-affair spouse, and post-affair spouse, and it can be very hard to handle when our view/feelings keep switching from one identity to the other. There is no easy way of getting through that, but you are doing the best thing by being reserved and keeping control of the strong emotions that you feel.
It’s interesting that your counsellor in the MC session got off the fence and actually took your wife to task. As another poster said, a lot of the time counsellors seem more interested in minimising things and papering over the cracks, rather than making people take ownership of what they have done. The counsellor sounds like someone you should stick with, because her feelings concur with yours, and she won’t sugar-coat anything. If your wife refuses to go back to that counsellor, you can still go to her for Individual Counselling. She clearly understands your view of things, and therefore your feelings, and that is a good foundation for any counselling.
“I let her know she needs to hear the harsh truths and if she can't handle it then she can leave…”
“I let her know her consequences are well deserved, she seemed to get annoyed that I said that.”
It’s good that you are not rug-sweeping. At the moment, your wife is refusing to acknowledge the significance of what she did, and the damage it caused. Instead, she is focused on herself; beginning MC with putting blame on you (she’s the victim), grumbling that the counsellor was harsh to her (victim again), feeling sorry for herself about the poison-pen letter (victim), the kids not talking to her (victim), you not wanting sex and not responding to affection (victim)…It’s all about her and her suffering the consequences of her actions, with very little focus on you, what was done to you, and how you are coping with it. Her refusal to accept the impact and magnitude of what she did is going to make MC difficult, although you say that she did finally admit some responsibility towards the end of the session. That angle needs to be pursued, because counselling cannot achieve much if she is in a state of denial and appealing for sympathy from the person whose world she turned upside down.
As so many in the forum have written, these things can take a long time to resolve themselves, whichever course people take. Progress is possible, and you do not have to make any ‘big’ decisions until the time feels right to you. If your wife can shift out of her self-focused mind-set, start empathising/sympathising with you, and accept the responsibility that goes with the fact that a marriage is made by two people, but can be broken by one, things can improve. In that respect, individual counselling is what she needs in the immediate future, rather than MC. Individual counselling can also help you work through your feelings, so maybe investigate whether your MC counsellor would be available for some IC sessions.
In the meantime, keep doing what you’re doing. You are steadfastly refusing to rug-sweep, which is important, and while you are not letting your wife off the hook, you are not being hostile or vindictive for the sake of it. Your actions, given the circumstances, are extremely reasonable and humane, even if there are times when giving comfort makes you feel uncomfortable or irritated. Arguably, you are the one with the right to be seeking comfort and support, not dishing it out to the person who caused the problems. However, you are handling it all very well.