I am so sorry that your family had to to through that. One thing is clear - the CPS system is broken. In my area there are families where the parents are bouncing off the walls from meth and cooking it in the home while CPS gives them warnings but never actually does anything.

Here they continually harassed you even though you were not mistreating your children and were reasonably compliant with their demands. I wish that there was an easy way to make CPS truly beneficial in all cases especially this one where they clearly caused more harm than good. My heart goes out to your wife too, I suffer from anxiety as well and cannot imagine the hell that such scrutiny over her parenting caused.