nor am I a bad person in our community
By what definition? You have sex outside of marriage, with a married woman, without protection. That doesn't fit the definition of "good person", at least from a moral view. Were there any other guilty parties in this? Sure---but that doesn't excuse your behaviors, and should help to explain why you're in this situation.
Affairs are very much like chemical addictions---right down to the brain chemistry that is triggered during affairs. So your affair partner is acting like she's a crack head---one minute she's telling you how much she loves you and how great it is to be with you, the next she's having guilt and deciding to go back to the marriage. This is typical---and its a reason why the vast majority of affairs burn out within a couple years, and never lead to a long term stable relationship.
For her to make a "good" decision, she has to get over her addiction---and that means you. That means that you should have no contact with her, regardless of whether she's seeking you out. It can take months to get over this addiction---and any contact will set her back to square one (or close). So you're in a catch-22: you continue to discuss this with you and you're going to get the addict's bipolar type reactions. You step back, and you're going to feel as though you're powerless to negotiate.
My advice to you, as a "good person in your community", is to get away from this situation for the time being. That might even be in the form of a no-contact letter to the wife---tell her that you will not be involved with her again, and she should work on her marriage. This puts the ball back into her court. If she is able to successfully save the marriage---this child will (hopefully) be raised in a loving, 2-parent environment. Win for the kid, win for the couple---you're the one who sacrifices. If the marriage falls apart (or she doesn't even try to salvage it), she would likely come after you for child support---and at this point you would probabaly have access to the child.
For you to legally pursue custody---it may be possible, depending on your state's laws. To me, that appears to be a lose-lose-lose situation: it will likely put a lot of pressure on this couple's marriage (sometimes that can help rebuild, fighting a common enemy), it would put the child in the position of being a pawn, and it's likely to cost you a lot of time and money.
What I see from your posts is I want..., I want... My child... . As a upright member of the community---you need to see your selfish desires for what they are---and truly attempt to make a decision based on the needs of the child and the community at large. Not just what you "want"...