Agree with aldi, while they have been unreasonable, there is no need for a big show down, you can easily use the passport and not being able to travel as an excuse.
Dh and I also have a very hard work sil - but our mantra has been "don't say anything you'll regret every Christmas dinner for the next 30 years". This doesn't mean be a doormat, you can just stop putting yourself out.
For example, I used to deal with sil's changing food fads (every other week she was allergic to a new thing) as we had them over about once a fortnight, I'd fit round when they were free, having ds out of his routine and difficult etc, then she did a few things that makes her seem rather similar to yours. Rather than having a show down, I just withdrew. No more invites, invites to pil that fitted round sil but not us were just turned down. It helped that dbil moved jobs to being in an office building 5 mins walk from dh's so that they now meet for lunch every other week (meaning that dh can drop into conversation seeing his db to mil so she's not as aware of the rift). We did a duty visit at Christmas to deliver gifts to their dd, but other than that we've not seen them as a couple for nearly a year.
There's been no drama, if i need to see them I'm polite, still friends on Facebook and 'like' any picture of dn posted etc. but no more accommodating. "that doesn't work for us" and "no thank you" are good phrases. Most importantly, by never sinking to their level, sil is now the bonkers one as far as dh family are concerned. I'm seen as reasonable.