Oy, there is a bit of stickyness here then. So basically, she plans to become Episcopalian, right? She’s going to go to services with you on Sundays and you’ll raise your kids Episcopal. Basically, she’s converting if I understand you right.
This gets tricky and hard to understand. Especially if people try to explain it with a sledgehammer. Catholicism tries very hard to establish structures to guide the flock. It makes the administration simple and legally just, but doesn’t always come off in the most pastorally sensitive manner.
My understanding is that a catholic, sacramental marriage is not just about two people in love, but about their mutual relationship with God and their openness to a family. This is more than unredeemed humanity is fully capable of. It requires Grace to both survive and flourish. Because the Catholic Church recognizes herself as THE church Jesus established and gave the Great Commission to, she makes pretty tough demands on her flock. Keeping this multifaceted mission of marriage in mind, the catholic church requires her members to either marry in the catholic church or receive the permission of the bishop to marry outside. That permission is usually contingent upon the promise to raise children in the catholic faith. No promise, no permission. Seems dictatorial until you really see the above from the catholic perspective. We take sacraments and grace VERY seriously and take obedience to Jesus even moreso.
I’m not up to date on all the specifics, but if you just blow off the above and go forward with some ill defined blessing from a local priest that lacks the authority of the bishop, then in the eyes of the catholic church your marriage is NOT a sacramental marriage. Maybe you don’t care, why would you (personally)? Does she? Perhaps not if she plans to functionally leave the church anyways (go to church with you, raise the kids Episcopal). Or perhaps it won’t be until later that it will cause her sleepless nights regretting the fact that her marriage lacks the Grace of the Sacrament of Matrimony. The ugly practical side is that Church law essentially considers this decision a manifestation of immature faith at the time of the marriage and if she divorces you someday would be grounds for an immediate annullment. Not a nice thing to have in the back of your mind. (unless you are Henry the VIII! Sorry, couldn’t help the quick friendly dig!)
It used to be that there was a way forward here that respected all, though it doesn’t seem so at first blush. Bear with me. That way was that the catholic one would formally (usually on paper) renounce their catholic faith in favor of converting to something protestant. Strangely enough, that action makes the Catholic Church actually recognize the marriage as a sacramental marriage of two protestant christians and the “defect of form” annullment option would not be open to you in the future. The reason is that she would be being consistent. She is not ignoring the catholic requirements of marriage out of immaturity, she is doing so out of principled belief, which includes making the formal statement of disbelief in the catholic church. The Church respects that consistency and since she is no longer catholic at that point she is free to marry you both naturally and sacramentally. But it sure ratchets up the tension with the family, eh? On the other hand, that tension is an honest one, not just a window dressing to sooth their feelings. She’d actually be declaring what she intends. That’s not all bad, if hard.
I’m not sure that option is current anymore, but the priest would know. Be sure to make it clear that you don’t want a quickie pass, you want to do it right to ensure that your marriage meets the criteria the catholic church has discerned are needed for a sacramental marriage, even though you don’t intend to be catholic. Ironic that it requires a formal defection for the marriage to be sacramental, but that’s just where the logic takes you.