Your Wife have to Use AP Only
Though INS may or may not know that your wife has invalidated H4 status by using EAD, it is always safe to go by law. Any way what is her problem in using AP ? If you think that if she uses AP to re-enter, you too may lose H1 status, you are wrong. You will remain in H1 status if you have not used EAD so far.
You can use AP and H1/H4 alternatively, but once You use EAD to work you lose your status as H1/H4 and become adjustee.
Following link might help
http://www.hooyou.com/news/news011003h-1b.htm
This Part...
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2. EAD
For various reasons, an alien on H-1 or L-1 status may want to apply for EAD, and he/she can do so along with the I-485 application either after his/her I-140 is approved or concurrently with I-140 application. However, for purposes of approval of the I-485, those who are on the H-1 or L-1 status and whose adjustment of status applications are employer-sponsored are required to prove their intent to work for the petitioning employer, even though they can obtain the non-restrictive EAD. (INS Adjudicator's Field Manual, Chapter 23)
If an H-1 or L-1 holder decides to file for and obtain the EAD but never uses it to work, he/she is still in valid H-1 or L-1 status and able to extend the H-1 or L-1 as needed (up to the maximum allowable time on that status). The mere fact of obtaining the EAD does not affect one's status; only if the alien uses the EAD to take on another job or use EAD to work for the current employer, would he/she no longer be considered to be maintaining H-1 or L-1 status. Therefore, if an alien on H-1 or L-1 status obtains an EAD and then go to work for another employer or use it to work for his/her current employer while waiting for the completion of her/his adjustment of status application, that action would effectively terminate the H-1 or L-1 status of the beneficiary and he/she would have to file for advance parole to travel abroad and reenter into the U.S. The alien in this situation would be admitted into the U.S. as parolee and no longer be considered as on H-1 or L-1 status. (INS Adjudicator's Field Manual, Chapter 23)
On the other hand, an H-1 or L-1 holder who travels out of the United States and returns on advance parole is authorized to continue working for the petitioning H-1 or L-1 employer. He/she would not be required to obtain an EAD to work for this same employer, within the validity dates of the H-1 or L-1 petition approval. (INS Adjudicator's Field Manual, Chapter 23)
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Also this from Sheela Murthy's Chat
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Dakshina : Will the H1 and H4 get terminated if EAD Card is used?
SPEAKER_Attorney_Murthy : No, not necessarily. If a person on H1B also gets the EAD but has both valid, the H1B and the EAD are both valid. If the H4 uses the EAD, then arguably the H4 may no longer be valid.
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