I must say if my partner called me a retard or ever told me to f*** off, the relationship would be over on the spot. that's not love. that's just incredibly disrespectful. however, if you still love him then relate may be a good idea - my bf and i did that for a while and it was nice to talk about things in a non-argumentative context with neither one needing their point to be 'right'.
if you don't love him, then having been the product of an unhappy relationship myself, i look back on it and i'm glad they went their seperate ways. the arguments and the sleeping in seperate bedrooms wasn't nice. and there was always tension in the house. yes, splitting affects your kids. but so does your happiness.
As to coping, there are things to think about as to surviving on one income, having somewhere to live (unless he moves out of the house and you stay) but i know a number of people who have done it and it's definatley do-able. all of my friends, after getting over the shell shock of being independent, absolutely loved the liberation - they were all v unhappy in their previous situation.
So i think the first step would be to talk to someone for legal advice about the split; how it is decided who the kids will live with, maintainence payments etc and then look at accommodation arrangements. Obviously if you don't work, this is all a lot more complicated - i would suspect you need to talk to the council about housing in that situation, too.