I'm sorry you are in such a difficult place but Your last paragraph is very positive and decisive. You haven't given up hope, but you've decided you want no part with the religion. Now act on those decisions.
I was only a few months in the 'indecisive' phase of being half in half out and looking back it was the most painful time emotionally and mentally. I don't know how some keep that going for years. It's also been much easier on my husband also now I've made the decision and made it clear to him now I feel. I'm no longer a JW, he is. But now he knows where he stands. I'm feeling much stronger and happier now I've walked away and I am proud to want to live a normal life, he is disappointed but adjusting.
With my kids, I set the example and my older one who was still in followed me out shortly after. With my little one, I let her do all the celebration stuff at her nursery. I made it clear to him I would not allow him to speak to the teachers and tell them she doesn't do Xmas. I gave her a birthday and she went to her first party for someone else's a couple of weeks ago. My older kids have told me being left out of these things as we raised them was very painful for them. He knows not to mess with me on the these things as I am much stronger and firmer with him about what I will put up with. Having said that, he prays with our little one, reads her bible stories and I let him take her on a Sunday. But she's only 2 so I might have to rethink some of these things in the future.
The main thing is she will never have her associations restricted in any way, she will always be a part of things at school, extracurricular activities, education etc.. Trust me I've got 2 teenagers who've left the organization, when it comes to those years, given the choice, the rule-bound religion has no chance.
Do what YOU want, teach your kids by example, I agree with others that your wife is looking to you to ask her to leave the org.. She probably can't cope with the guilt of that decision.
Why not say to her that trying to fulfil the demands of this relegion of your parents has made you depressed and unhappy and you haven't been able to be your true self, that you don't want the same for your kids. Tell her from now on you want you and your kids to have a normal life, ask her if she will try it with you for a few months, to see if she can see a difference in your happiness. Tell her you don't think a loving God would be angry at a man for trying to improve his life and his mental health for him and his family. If she won't go along with it , you do it anyway, and go out and have fun with your kids as much as possible.
P.s. A tip on this, soft play centers are a great place to take your young kids to get rid of some of their energy & socialize, you can meet other parents too to make friends outside the org. I've got chatting to a few parents at our local one and as a result we got invited to our first birthday party. My 2 year old LOVED it, dancing, laughing, singing happy birthday and eating cake. Wow it feels great to be part of the real world!