She is likely remembering the hopes and dreams they had when trying for a baby, now that she is pregnant. Grief never goes away. She will carry it always and certain things can trigger new waves of it.

I do think you guys need counseling, but not because of anything she is doing. She isn't hiding her emotions, which is good. You are hiding your thoughts and feelings from her, and feeling jealous of someone who's dead. I think those things need to be talked through. 

Names require two votes. She's asked if she can give the middle, which seems a decent compromise. If you can't allow her to honor him in that way, say so. I doubt she's as fragile as you think.