Your expectation of privacy with a spouse pretty much ends at "don't go try to figure out what I got you for Christmas".

Works for you. If other couples agree to larger zones of privacy, I think that's OK, the operative word being "agree."

One thing I find puzzling is that about 3 years ago OP's wife had a gambling problem, so I would have thought that after that experience he'd prefer more transparency on both sides. (I don't know if current wife is the same one, or if there's been a divorce/remarriage.) Maybe in contrast to the gambling issues, the "where do we draw the line regarding FB/email" question just didn't seem important and wasn't discussed. However, it's naive to think anything on FB is private, regardless of settings. Teenagers routinely are taken aback by police finding out about their underage drinking from their own postings, for example, but OP is old enough to realize that anything on FB can, sooner or later, be found by friends, prospective employers, granny, other relatives, etc. Which begs the question: why was he engaging inappropriately with another woman in such a public forum? Was he just joking around, and figured that would be obvious? Was he on some level rebelling against marriage and wanting to get found out? Or did he think (a) FB is private and he wouldn't get found out and also (b) it's OK for a married man to fool around online as long as his wife doesn't know and there's no physical follow-up?

I don't know enough to figure out what really happened or why, but I do feel OP's question (of whether his wife was right or wrong to "hijack" his accounts) is somewhat irrelevant. For example, IF we said, "she was wrong to change the passwords," then what? Would he figure they're even, and that therefore she should magically not care about his FB postings, even after she demonstrated pretty clearly that she does care? He seems more interested in winning an argument than in repairing or even acknowledging the damage.