There's no 'might' about it.
It is wrong for a married [yet seperated] person to be dating anyone else.
Why she's eager to have a baby with you, I don't know, but she shouldn't cheat on her husband [cause she IS still married] to get pregnant by you. Why can't she just file for divorce and legally be with you if she loves you so much?
I'm no lawyer so I don't know if her husband can take her kids away. He can certainly fight for custody of them at any moment. And if she gets pregnant with your kid while she is married, it would just make her look like a bad person/parent to the court and would probably help her husband get custody of their kids.
Getting custody doesn't mean he takes them away like she'll never see them again but if he gets full custody they would live with the husband and she would be able to visit and take them some weekends. They wouldn't live with her.
Right now, you say, she lives with her husband for the kids sake. Once the husband finds out she's pregnant - depending on where they live and who owns it - he can certainly attempt to kick her out.
My advice to you is for her to get a divorce, custody of her kids, marry you and then get pregnant by you.
As long as you guys can afford taking care of 3 kids - remember they may want to go to college, summer camps, etc. Are you ready for a family of 3 in your home?