Welcome, C&B. I'm not your age any more, but I think I can relate. Everybody, C&B has written her story in her profile, and it's a doozy.
You know, C&B, reading your story I think you've got a lot of great things going on in your life. You have a good husband and two lovely children. You are moral and you love your family. The two of you have found a nice regular church and are starting to redefine your life on your own terms. This is all good stuff!
It seems what holds you back is the old fear and guilt that you were saddled with from a child. Also, talk about extended Witness family! You are surrounded! How practical would it be for the two of you to move some distance away? Just a thought.
I also think you may be right in that a swift break from the Witnesses might be best for your mental health. I don't usually advise this. But your dread of how your family WILL react when it happens is holding you back from seeing all the beauty in your life right now. It's as if you are staring at that scab on your knee, wondering if you should pick at it, rip it off, or leave it alone. You anticipate the pain, but you are never sure when it will happen. Don't bother getting DF'ed again. That will just confirm in their small minds that you "haven't changed". Of course you have changed. You are a good, wise, loving, caring wife and mother. If they can't see that, they are blind.
How about a short DA letter, "I no longer consider myself a Jehovah's Witness. My reason is that I see nothing wrong with celebrating Christmas in a small way with my family. Please remove me from your records, and don't bother calling. I'm happy with my decision." To ease the pain for your immediate family, why not a short note warning them of what you are about to do, and inviting them to go for coffee with you if they are curious as to why. If they choose to shun you, they will hurt you but you would rather live with that pain than to continue with a lie.
I tell you, human beings - all human beings - are curious. Family members who are ready to listen to the "real you" might just take you up on the offer.