Now to the point...I suspect she has had an EA, likely not PA, with our musician friend for many years.
You are probably right then.
My biggest concern is my wife making it seem that our musician friend is a 2nd dad to my kids...I wish to not confuse my kids with that BS. I'm their dad, no one else.
Assuming you are active in your kids' lives then this will never be an issue. They know who "dad" is. And if you haven't been active in their lives, well now is your chance to do a 180 on that.
My kids love me, more so than her and they have said so even before the BD, that is because I care and do my best to be active in their daily lives. For instance, recently the STBX and daughter (12) was out shopping and daughter wanted some lunch...STBX refused to pay and told daughter to pay for it, which upset my daughter....she said to me "who does that to their kid"