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It may be she takes care of Dad and you take care of the kids. Its on her that she is missing out on the most important time of their lives. They will be grown and out of the house before you know it. Please, don't leave the kids in this situation. And do not allow FIL to abuse them in anyway. Verbally or physically. Like putting them down or figuring he can hit them because they don't do something he wants. They, on the other hand, should be told to respect him to the point that they don't mouth back. Just walk away. Really, this could be a learning experience.
I think talking to a professional maybe a good idea. Even the kids.
Agreeing not to agree is ok for now. Maybe as time goes on, she will see him for what he is and get tired of waiting on him. Do what you need to do to get your PHD. Find a job and then make decisions for you and your children. Seems like for now Dad is a priority and he is going to milk it.
My Dad was waited on hand and foot by my Mom. He was the bread winner and his home was his castle. I loved him, but he would never have lived with me. And, my DH would have been against it. Like ur FIL, he was a slob. I would not have waited on him hand and foot. My MIL questioned me one time about something I didn't do for my DH. I told her he was a big boy.
If the situation is truly unhealthy for the children, I'd consult with an attorney about options. The children's welfare comes first. I wonder if your wife realizes this.
I hope you can come to an understanding that preserves the family.
If YOU go to counseling, you will get stronger and be able to make whatever difficult decision you need to.
It can only help.