Wow, tough situation. Sounds like this girl has serious issues, and a history of them too. My wife and I are all for each other masturbating, hell we help each other out regularly (of course it usually leads to many other things as well, masturbating is like foreplay for us!).
If it were myself in your place, I would divorce her instantly. Respect and trust are two of the most important things for me in a marriage, and after a scene like that I would have lost both for my wife. Is this the reason why she is living with her parents now, just because she caught you jerkin off? That is serious over-reacting. If she can’t handle a simple fact of life then imagine what else she can’t handle.
Good luck man.