Sounds like you made a very difficult decision that was in the best interest of your children at the time the decision was made. I applaud you for that - my step-daughter's biological mother made the same difficult decision many years ago and allowed her daughter to move in with her dad and I, where she could benefit from the stability and resources that we could provide and that she could not. It's truly a sacrifice for a biological parent to do that I sincerely commend you for that.
That said, while your feelings are understandable, it might help you to reframe the situation in a more positive light. Your ex is probably able to provide a good home life for your children BECAUSE of his wife. It sounds like she has stepped into the role that you stepped back from. Much like my step-daughter's dad (we got divorced after she finished high school so he's now my ex), your ex might not really be able to step into that primary parent role. When my SD lived with us, I handled things for her just like I did the rest of my kids - signing up for activities, taking care of school stuff, attending parent-teacher conferences, taking her to the doctor and dentist, knowing who her friends and their families were, etc. My husband wasn't home to do those things during the day and I worked from home or took time off from work to take care of those things. It would have been hurtful and neglectful to NOT treat her like she was my daughter.
Your role in your children's lives is important. If I were you, I would do what we had hoped that my SD's mother would do. We had hoped that she would get an apartment near us (and by near us, I mean the same town or a neighboring town - not sure how close you are to your kids but in separate states seems too far unless you all live in communities on the state borders). This would also make it easier for you to modify custody in court, as jurisdiction wouldn't be an issue. We hoped that she would get a job where she could support herself and work predictable hours. We hoped that once she had a place to live and a steady income and steady schedule, that we could establish a schedule for SD to spend time at her place (overnights if she had a bedroom, or just regular dinners there etc. if she didn't). And we hoped that at some point, things would be settled enough that we could go to court and make the new arrangements permanent and binding. We pictured her mom being as much a part of her life as we were - going to school events, knowing her friends, helping her pick activities and classes and shop for a prom dress and get her hair done, etc. Unfortunately, none of that happened in our case but it could happen in yours.
Work on getting everything in place that you need to be able to share custody of your kids or at least have substantive parenting time. Talk to your ex about your desire to see them more, and don't be hostile about the fact that his wife is stepping up and parenting your kids. I get that that probably feels like a punch in the gut (there is a lot of guilt and shame for mothers who aren't in the primary caregiver role) but it sounds like she's good to your kids and that's better than the alternative by far. When you're ready, consult with an attorney about modifying custody and hopefully if everyone has the kids' best interests in mind, you can put together a plan that benefits everyone.
This must be very difficult - I wish you the best of luck!