What is YOUR purpose in getting involved?
Don't say it's to protect your friend, you already acted on that, and your friend decided to ignore your advice. If you go farther with this, you are doing it for YOUR reasons, not hers.
You're also not doing it for the kids, because telling the wife would surely mess up their situation. Also, you already said in your first post that he won't leave his wife & kids, so as long as the wife doesn't know, the kids situation is stable. Telling her does not help them, but can only hurt them. They may be hurt eventually, but that is not under your control. If you tell her now, you WILL hurt them.
I think it's about you, and I have an idea you have one of two goals:
1. You want to make yourself feel important, by seeing what a large affect you can have on other people's lives. You tell the wife, s*** hits the fan, lives are in chaos, and you can sit there in your moral superiority satisfied that you made it all happen.
2. You want to PROVE to your friend it is a bad idea, by telling her that it will not end well, and then by making it happen. (see #1).
So, which is it?
You've done your part by talking to your friend. I'm afraid anything you do beyond that is about you, not her.