Your mistake, djones, was getting a cat when you currently have a toddler and a dog.
And I don't imagine your quarters, inside or outside, are, uh, spacious.
You wanted to do something for the wife, but perhaps a dozen roses would be better.
I suspect probably it's just a good idea to pack the cat off to the Humane Society for adoption by someone with different circumstances, even if your wife by now is attached to it.
If both owner and cat are miserable, probably the cat should be sent to another home. I suspect the cat's about as miserable as you are, about the situation.
I'm not a cat person, but why the cats are here is simply because the real-estate is more than enough for everyone to have his own "space," both indoors and outdoors.