Should I abandon loyalty for a possibly more secure ideal future?

Should I leave a job and a boss that has been good to me for 6½ years for an ideal job with way more pros than my current job?

The background here: I’ve worked and grown with my boss for 6½ years. He’s told me I am more like a sister to him than an employee and he has always treated me as such when necessary (family tragedies, voice of reason for important decisions) and I feel that same about him. If I ever think to someone who I could turn to in an emergency he’s #1 (sometimes even over my parents)

The reasons pushing the change: In our company there are 2 central divisions my sales team and logistics outside. I am a general manager, where i run things inside the office but I oversee and “inforce” policies outside in logistics.
However there is an idiot outside who is the dispatcher and is mainly responsible for running the logistics outside, had he not been the boss’ childhood friend and wifes cousin, (and the person who introduced them) he’d been fired a long time ago for incompetency. Well we butt heads here and there but ultimately get the job done with me walking away from making the situation worse. Our head butting is attributed by his foreign old fashioned ways of not liking a Female in charge, I’ve heard this from him in so many words. I’d say we’ve had about 3 big cussing unprofessional blowouts, our most recent and highly escalated one was just a few days ago. This last argument just broke me, our previous blow out had pushed me to changes in how I approached him and how I dealt with him, but yet we still got to this huge intense blow out, where I did not raise my voice or even show any disrespect hoping he’d notice and listen to reason. But it did no good and I truly felt deflated and disrespected. My boss stood outside the glass door and listened in, and when this idiot stepped over the line, he didn’t step in. As this idiot kept ranting, I walked away and dismissed his whole scene. This was it for me, I didn’t feel my boss support and so many things that I’ve been dealing with came into a more negative light.

The twist: That night my husband mentioned to me that a City Job in my area of expertise had been posted, I had only 2 days left to apply before the deadline. In my anger and betrayal, I went and applied for this job. I got called in for a written exam (Step 1)

My Question: Do I tell my boss or wait til I am called in for an interview? He’s going to be on vacation the day of the test, so for me to ask for 2 hours to leave would be a huge thing, since a chief can’t leave there tribe at any time.
If I leave it will be a big blow for my boss who is working on a huge project and leaves me alone running the business days at a time.