I'm a dad with two kids, one went to nursery 3 days a week from the age of one while mum worked, one didn't (the income/childcare cost maths on 2 kids didn't work out) and I doubt you'd see any difference in their demeanour. Nursery is not some kind of punishment for your kids, in fact it's probably the opposite, especially if the alternative is being looked after by a stressed mum who's trying to do two incredibly taxing jobs at the same time!

From your post it sounds like the issue is your nursery, if you're not happy with it try looking around for a different one didn't. Speak to friends & acquaintances, do the legwork and visit some in the day and find one your comfortable with. I've seen quite a few people give up on nursery because the first one they tried didn't fit, don't let an implementation put you off the whole concept.

Working from home is hard with kids, I do it 2 days a week and I find it challenging to concentrate even though I'm not looking after them (headphones are your friend!) May be worth talking to your present employer and seeing if you can reduce your hours or become more flexible, say go down to 3 days a week with 1 work from home. In that situation your probably not going to make that day up while your kid is awake, but spreading a couple of hours a day in the evening or while your partner plays mom across the remaining days is doable.

Your kids most pressing need is some happy supportive parents (or parent) so don't beat yourself up about your decisions if your kids are smiling and happy. Parenting is a minefield these days, mostly because the natural parent emotions (panic, worry, paranoia) have been turned into multi-billion dollar industries. Trust your judgement and remember, it gets easier(ish) when they're a bit older ;)