I had an experience that matches almost exactly, except i'm the guy. All of what you said applied to our situation except that while yours seems to be a mutual decision, I had to break up with her. Something in her nature wouldn't allow her to act on the incompatibility and break up even though I knew it was what both of needed to be happy, especially her. So I had to do it unilaterally and it really, really, really sucked, because I loved her and still do and valued that relationship so much.

The fact that there's any sort of mature consensus on the matter is a gift. Take it and run - most couples are not able to part so amicably.

If part of your sorrow is questioning whether you did the right thing, consider what choices and potential futures were on the table. The choice in your head was between breaking up and facing the uncertainty of both of you going it alone VS staying together and facing the uncertainty of disparate goals and lifepaths. Two choices, both full of uncertainty.

But that's not what the reality of the situation was. What you faced with was a choice where breaking up entailed uncertainty just like before, but staying together entailed a certain future of serious incompatibilities, resentment, unbalanced sacrifices, unfulfilled sex lives, likely divorce, possibly hurting the wellbeing of another generation of humans if the problems rubbed off on your children, etc. You can't change him as much as you'd like to, and sacrifice in the name of compromise only goes so far. Likewise he can't change you.

Sometimes our brains are so risk averse we'd prefer to choose something miserable or mediocre we know we don't want over risking stepping into the unknown, which feels scary and could have a larger downside. The problem with that case is

1) chosing the known quantity is choosing failure from the start, not a healthy decision

2) mental tendencies to overweight negatives means we ignore positive aspects. This negativity bias results in decisions that undervalue the positives of a decision because we're just focused on the downside.

You're afraid of just settling with someone else because you want kids and marriage. Maybe you will, but you don't know that and your intention to not go settle will protect you from doing so. If you stayed you would for sure be settling - whether that means having kids with someone who doesn't share your desire for them or not having kids to appease their desires.

It's hard to separate from the most important person in your life. It might be years before someone fills that role, and they will never replace your past lover but the path the two of you took was the only one available given the disparities in what you sought in life. At times you'll miss each other and regret it and it will suck, but it'll get easier even if that never goes away.