Hey wasigh,
I'm in a similar situation, developer w/ teacher wife and education business. Two most important things I've learned:
1) You can sell to schools, but not by "selling" to schools. Instead sell to the teachers and they'll sell to the school for you. There are lots of ways for teachers to get schools to pay for stuff they want (grants, discretionary funds...). If you create a great product one teacher will tell another and before you know it a group of them want it and they'll pitch their principal.
I sold to 15 or so schools last year (big, small, public, private) and every one of them started with the school contacting me. I realize 15 is not a lot, but total time I spent on those sales was maybe 10 minutes and $0 each. I replied to emails, setup accounts and generated invoices.
2) As a developer you're going to want to solve the scale problem by coding. You need to fight this.
Take the money you make and buy adwords - they work (http://pseudocoder.com/blog/my-adwords-spending-for-2010)
Talk to your customers constantly - make incremental improvements based on their feedback. Only when there is overwhelming demand add a new feature or in your case expand to a new area.
Do more SEO. You're top 5? Not good enough. The difference between #1 and #5 is huge. Figure out what keywords make you the most money (might not be what you think they are) and attack those.
A final note (this one is tough and I'll try to be tactful). In the end your wife (however awesome she was in getting the site started) is just a user. If she's not interested in the business side then you need to take ownership. That means you may make changes without consulting her and that are unpopular with her that are better for the rest of the community.
Email me if you want to discuss anything offline.