i suggest just telling her how it is.
you have grown apart, you do not respect her parenting and it breaks your heart, you dont want your children around her, and your relationship can only continue if she takes a look at herself and try to be a better version of herself.
if you love her and want to help her, you could offer your shoulder and support while she face and resolves her demons and issues.
if you feel this is not your battle and you need distance to take care of yourself, then just tell her.
perhaps that is what she needs. some truth. (if she wont listen, maybe you could write her a letter, perhaps ask for her advice, what does she think you should do, what does she want to get out of the friendship, and what does she have to offer?)
i believe you are the best judge of your situation, just wanted to share my thoughts incase you can use them.
in the end, what matters most, is the health of you and your family. do what you have to do