Jessica,
You sound so loving and so compassionate.
There are so many points in your post, I don't know where to start. Ok... first, the disclaimer: I voluntarily placed a newborn at birth, so I'm not really able to speak about what your daughter needs in terms of bonding/confusion/etc, being that she used to live with her bmom. Only you can decide what is best for your dd, anyway...
That being said...
We talked about having a semi-open adoption. Everytime she see's her she cries..and when she has to say good bye she cries. I wonder how she will be able to deal with that...how she will be able to move on...and find peace in her decision...when she is constantly bringing that pain into her life...of having to say goodbye to her over and over again.
It seems this is a common thought/fear about open adoptions. All I can say is, the saying goodbye over and over, while not easy, is for me, better than never seeing my birthdaughter. Also, each goodbye gets easier. In fact, the goodbyes don't even affect me now. It's been three and half years, and I know now in the core of my soul that D and Y are here for the long-haul, and that there will never be a last goodbye. That helps a lot. Also... seeing Marie with Y (her amom) made it impossible for me to go into denial. That's a good thing. I was forced to acknowledge that Y is her mommy. Over time, it started to feel "right" that Y is the mommy. Now, I don't even bat an eyelash when Marie runs to her mom for a kiss after falling down. Etc. It's just how it is, and I've been around it enough that it's normal to me.
I feel so bad for her loss..and wonder if she will...always regret her choice..or feel like she had no choice. I don't want to be seen as the monster who stole her child away from her.
I'm sure you know this in your head (hearts are always a different matter

), but there is really nothing you can do about this. No matter why she relinquished her rights, she'll have to come to terms with it at some point. (Something I am still trying to do, too.) She may indeed feel angry towards you for a time. It's fairly normal for birthparents to feel that way towards the adoptive parents, I think. I felt that way, even having truly voluntarily placed.
That's not to say it's FAIR or that you DESERVE it (you don't), it's just a part of the grieiving process for us: getting angry. Unfortunately, when we are angry because we don't have our kid, the easiest person to focus our anger on is the person who does have our kid. Again: it's not fair, it's not right; and it doesn't give her permission to express her anger to you or take it out on you. But she may feel angry, and there's not much you can do about it. I doubt that having an open adoption or a closed one will make any difference. In fact, if I were her I'd be more inclined to feel angry if the adoption were closed shut on me, even if only for a time. (However, you have to do what is best for your dd, and if stepping back is what's best, then just try to communicate compassionately to the bmom that you are not bowing out forever.)
I think my desire for the open adoption...stemmed more off...trying to ease her bmothers pain...rather than...the benefits it can have for my daughter.
Again, nothing you can do can take away or ease her pain. I know you know this. Just keep reminding yourself: your responsibility is to your dd.
While it is utterly, wonderfully compassionate of you to have wanted an open adoption to ease the bmom's pain, it's really up to the bmom to decide what will help her. Not anyone else. If she decides that openness is what she wants, then it's up to you to trust that she knows her own feelings and needs, and simply decide if that's what YOU want, too (for your dd). Try not to second-guess bmom. Respect her enough to believe that she knows what's best for herself.
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That being said, I am not pushing one way or another. As I said, you have to decide what is best for your dd and your family. I am just advocating that you look at the situation from that perspective, rather than the bmom's. Bmom is (presumably) an adult--at least adult enought to have had two children--and she's responsible for her own feelings. Treat her with compassion, yes, but try not to presume to know what she needs. Let her tell you, and then decide if you meeting those needs will also help meet your dd's needs.
I know that if D and Y ever approached me and said, "We're backing off from the openness because we think it's too hard on you," I'd be furious. I'm a grown women, they are not my parents, they have no right to try to "parent" me. If, however, they approached me and said, "You know Nicole, we love having you involved in our family, you're a great person with many traits we like, and we don't want to do this, but... we feel we have to back away from the openness right now, because Marie can't handle it right now," I'd be sad, but fully supportive.
Is any of this making sense?? Sorry so long.
Again, thank you for exhibiting such kindness towards your dd's bmom.

I think that is amazing of you and I have great respect for you because of it. You have a sincere, good heart, it seems. Just let yourself off the hook a little--you're not responsible for her pain.
(hugs)
Nicole