I feel like I wrote this post. SERIOUSLY. And I did leave- my situation was different though, we were only together a few months before I got pregnant, and I started to see that I was everybody's mom before dd was even born. I labored by myself - although he was there etc. I laughed when you said your hubby pulled the drama routine for a stubbed toe- mine once stayed home from work because he was stung by a bee!
Anyway, my issues are so similar, I couldn't just read... he isn't a man, he is a ten year old boy. I am an artist, I have to go to openings, and be social and I enjoy it....but get one beer in my ex and he was ... well I won't let him talk to anyone important- I once asked him to sit in the car, I though he was going to ruin my career! I am not saying the things I did were right, and I may have destroyed our relationship with my ideals, but I couldn't be happy. I felt that not only could I not rely on him, but that he was a liability. I tried couceling, and I found myself just spitting out horrible things about him- little details to her. He wanted to try and be a good dad, but he was ridiculous- not in a harmful way, but I just kept thinking "you can't be trying" and I would have to redo anything that he did.
Early in our relationship he was "sick" (before I knew how much he complained- how weak he acted) and I was making chicken soup- I got the broth all ready to go and sent him to the corner/local grocery (3 blocks away) for carrots.... he came back an hour later with a huge bag of frozen carrots from wal-mart...yes, he drove all the way into boxville (several miles away) to go to a store I won't set foot in, to buy pre-cut frozen carrots... and he was all proud because they were dirt cheap! nice, for my from scratch chicken soup.
So- I am glad I left, I found myself being so disappointed all of the time- I couldn't accept his happy idiotness- I needed a deeper connection. We couldn't really have a good fight because I felt like he didn't speak english sometimes- it was like arguing with a ten year old. I didn't feel like this was a good model for my daughter, me taking care of everything all the time and feeling frustrated with him pretty openly. I took our daughter on a long weekend when she was small- the idea of him having a break (not that he needed one, but we both could use some time) when I got home the house was littered with crappy food wrappers and his big tv had been moved into the living room - dishes in the sink, dirty bathroom etc. I was under the impression that my leaving might give him some space to tidy up do some thinking- but no, I returned to a much larger wreck than I left...and the part where I loose it? he doesn't even see it or understand my frustration. He said "you didn't tell me to clean the house" and if I HAD, he might have.
My situation is different than yours though, I wasn't leaving a history... It is sad, I feel bad for him, I know I sound awful and judgmental, but we both deserve to be happy - happy parents are best for kids. He wasn't happy with me feeling let down all the time, I was frustrated...it didn't work. We are still friends, I live 3 states away right now and am totally broke- I had to leave my network to find a place I could afford...my daughter and I are rebuilding. I know I did the right thing for me. I don't know if I could have faked it, or become more accepting. I don't know for sure if my disappointment was general and he was an easy target... My daughter is fine, she misses him, he is a wreck over her. I try and be supportive, but I supervise their phone calls because I still feel like I have to be damage control if he is involved. I wasn't always a control freak- I feel like he put me in that position and I rose to the occasion, just like OP said "they had this bad dynamic" that is exactly it.
So I would say if you can leave and still be friends, still both maintain your relationships with your kids, you should be happy. You are modeling everyday for those kids, and they will pick up the dynamic...who knows maybe DH will start to make his own choices once you stop being there? (mine didn't he just started following his friends). Maybe just being separated will help you both see things more clearly. Never think you need to do anything that hurts just for your kids (except maybe stay up all night :)- if it feels wrong, there is probably another way.
I hope this helps, and honestly- it was fun to read your post so similar to my own thoughts, it makes me feel connected, less insane :)