After some more research I'm becoming more and more certain that Susan Walters was first married to John Jeffery. Some of Susan's children have both names on the documents.
Matilda's birth record in 1864 was registered under the surname Jeffery and she died the same year but her death registration is listed under Walters.
Ebenezer has both Walters and Jeffery surnames on his birth registration (born in 1865). One of the other ancestry.com members had an official copy of Ebenezer's birth certificate posted and it lists the mother as Susan Jeffery. Side note: Salome and Walter also had a son named Ebenezer (would have been Susan's brother-in-law), possibly another name passed along.
Susan's other son (and my husband's line) Walter Stephen Walter's official birth certificate also indicates Susan "formerly Jeffrey."
John Jeffery, Susan's possible first husband, passed away in 1863 so Susan must have met John Walters in that time frame and had Matilda. On Susan's death certificate it says that she married at 15 years old - which matches up to when she would have married John Jeffery in 1857 in NSW. It also explains why her next of kin listed on the death certificate don't match John Walters'.
If you're able to find out any further information from your father, please let me know. It's great to finally run into someone on the site that is researching this line. Would your father by chance have a photo of Susan and John Walters? I'm preparing a book for my mother-in-law and it would be so great to include one since her family has never seen one. I have an old family photo of Walter Stephen Walters that I'd be able to share.