Greetings and peace be with you Stoic; and welcome to the forum,
None of us on this forum know you or her, so we might not be in the best position to give advice, can you both see an imam together?
From what you said, she had a choice, she did not have to tell you about her affair, but she did. It seems as if she wants to be honest, and if she gets married again, she does not want any secrets. We all struggle to do the right thing, she may well have wanted to tell you ages ago, but did not have the courage. However, she sounds like a truthful kind of person who does not like to keep secrets. She was probably deeply hurt when her husband cheated. We all sin and we all struggle to do the will of Allah.
If she is sincere in changing then ill forgive her. Am I wrong to forgive her about her past? Should I just drop her?
Only Allah can judge her true sincerity. If you do forgive her, then it has to be totally. Can you pray for her, and ask Allah to forgive her? When you have your next argument, you cannot hold her past affair against her. This would mean you have not forgiven her fully.
Staying married has to be one of the toughest tests in life, I have only been married thirty one years, eleven months, and nineteen days. The first thirty years are the toughest, then it gets harder. Life throws a lot of problems at you, I say this in a way that it might test your determination to stay married for life, should you go ahead.
Please ask a scholar for a greater Islamic ruling, and pray for guidance.
May Allah bless you, and those you love and care for.
Eric