I'm very sorry to hear this, Natasha.
I'm sure there is a much larger picture going on in your life than what you can feasibly share with us here. I really wonder if there is more going on than just the crossdressing. Perhaps the cding is more of a scapegoat for other issues that have built up.
An ultimatum is a very bad sign. Every time I encountered an ultimatum in relationships prior to my wife (non-cd related), it marked the beginning of the end. Sometimes it was me laying down an ultimatum about something, but the end game was always the same.
Regardless of whether or not your ultimatum is truly about your cding or perhaps a conglomeration of things, you're really going to need to do some soul searching and have some serious conversations with your wife.
Sometimes time apart from each other may help the situation and allow you both time to clear your heads. I know there are kids involved, but you have to consider some temporary time away, or face the possibility of the long term apart (divorce). Bring it up with your wife and see where she stands with apart-time.
What I'm sure you already know is there is no cure for being a crossdresser any more than there is a cure for enjoying a delicious dinner. If your wife cannot handle your female side and it's cding or her... the writing is on the wall and the stage is set. If you do turn up some other issues in conversation, I really hope you can work them out.
I want to offer something positive here, but I've read this story many times over the last couple of years.
Whatever the outcome, I hope that you and your wife and children find happiness down the road - be it together or apart.
Your friends are all here wishing you the best.
