First, congrats on losing the weight. It takes a lot of discipline and organization to get on the bike everyday, especially with 5 kids! As to the body that you are developing from cycling only, it is quite normal and predictable. Cycling doesn't produce large muscles, even in the legs and buttocks. And, cycling produces no muscles in the upper body. That's because of the nature of the muscular activity in cycling. Cycling involves very high reps and very low resistance. Even when you're going 18-20 mph, your legs are putting very little force on the pedals. The weight of your legs alone are probably producing 20+ pounds. A little push on the downstroke will easily raise that to 40-50 pounds. That's enough weight on the cranks to go 18-20 mph if your cadence is high enough (e.g., 100). The upper body is virtually dormant, just providing stability so that your hips aren't moving around on the saddle. Cycling alone will make you extremely fit and lean, but may not produce the sculpting you are looking for, especially in the upper body. For that, you should supplement cycling with some muscle specific exercises. If you want tone, do low weights and high reps. If you want shape, do high weights and low reps. You might want to check out the Russian Kettlebells for upper body workouts. BTW, I don't attach much significance to weight. Rather, I measure body fat %. This is not to be confused with the body mass index, which is just a height/weight formula. I mean the percentage of body fat that is measured with calipers or electrical impulse devices that actually measure your body fat.
As to racing, the first thing you need to learn to do is to stay with the group in front. Otherwise, you are really on an organized training ride. You are probably now riding at a relatively steady pace and power output. Staying with the group in front requires that you survive the surges and the climbs, when your power output goes up significantly for anywhere from 2-10 minutes. It's very hard to learn to do that riding alone. Try to find out where and when some strong riders in your area ride their training rides. If you can, ride with them. At a minimum, hook up with a group of strong riders on the weekends. Stay with the group in front as long as possible. You'll get dropped initially, but eventually you should be able to stay with them. When you can stay with the group in front, you're ready to race.