Good God.
Make a new will NOW - make sure there are clear instructions left with e.g. your mum on where it is lodged etc.
Easy enough to do, just leave everything to the kids and 'her' will is void.
It's REALLY important.
This doesn't seem to make sense though - she had it drafted, but it's YOUR will, in your name? Where is it lodged - with her solicitor? If it's your will, once she is gone, how on earth does it protect HER assets? Tres bizarre.
It has to be witnessed to be legal, did your friend witness it in the end? If so then it doesn't matter if your surname is a scrawl. It will be legal.
It sounds as if she is a controlling bully. You don't have to accept that. It sounds now as if you very much have been accepting it, under the guise of a nice normal caring-for-widowed-MIL relationship.
She can be who she wants to be, but the most worrying aspect appears to be your DH's role. So when she forced you to sign a will on the threat of cutting you off, he didn't tell her where to stuff it and stop harassing his wife? You say earlier that he's going to go and 'smooth things over' - smooth over what exactly? She's been utterly rude to you, and he's going to go and make things better by apologising to her?
What do you think his reaction would be if you were to dig your heels in and say, she's a horror, I've had enough, we'll see her every two weeks max and will spend next Christmas with my parents?
How about if you asked him to make new joint wills and not tell her?
If the answer to either of those is the wrong one, then there's your problem. She bullies you and your family and sees them as an extension of herself because your DH has never made it clear that that's not her place.
Time to get some distance methinks!