I think the fact that he's been hiding this from you and lying to you is enough of a reason to leave him. Trans or not doesn't excuse doing things behind your partner's back. Also, his needs/fetish do not take priority over the needs of your children to have an intact family with a present father. Trans women are not women. It's not hateful to recognize that. Humans cannot change sex. He is not a woman. If he thinks he feels like a woman, that's because he views women only as stereotypes, he has never lived as a woman, he has never experienced being a woman, he does not view women as full, complete, complex human beings, just a bunch of stereotypic attributes. Recognizing this is not harmful. He's looking at manmadepussy, does he want to transition? If so, he's looking at making himself a life-time medical patient. You and your family will have to sit by while he goes on HRT, gets breasts, starts wearing women's clothes, you'll have to fund and sit by while he gets extensive surgery to change his body, you'll have to sit by while he dilates several times a day, you'll have to sit by while he gets more and more entrenched in the trans community, you and your children will have to deal with his pain and surgical complications and his psychological issues.

Check out mumsnet, there are several threads there about trans widows. They're very informative.