Wow godlives. If that is how your children are at 10 years old, I think you are doing just fine as a parent. That is a very mature and meaningful conversation to have. I bet that moment sticks in their head for many years, if not a lifetime.
We have 6 children ages 7 through 18. It was very traumatic for them when their mother went into a sudden and dramatic crisis of faith a couple years ago. I can only describe it as if they were processing that she had died or that we were getting divorced. It was very very hard on them, and I attribute that to them having the concept that she will not go to heaven with them, a form of separation anxiety. It has gotten a lot better since then, but it was a tough transition for them. DW thinks out loud (her personality) and said a lot of things about the Church.
It gets better. I really found that talking to the kids openly helped. In fact, it made them feel better about issues they had with the Church and religion (the older ones).
As far as recommendations, I say love your wife and love your neighbors. Being happy, positive and confident goes a long way. The most important thing is your family. I think there is a lot more common ground than your wife might think, like Ray and Hawk mentioned. Build on that.