Cantsleep I have often said my MIl would cheer if I got seriously ill, the truth is many of them would yours has just actually said it. Many many people are not mature reasoned dali lama thinkers, they are petty and spiteful and mean and horrid.
When you yourself try and control your baser emotions, try and behave in a reasonable and fair way, when in the face of such un bridled selfishness, leads to madness.
Of course you have to re evaluate your relations with them, the old word....boundaries etc, and take time to absorb the shock. Usually what happens is, people get hurt, they recoil, feel upset, then time rolls on, events happen and they usually draw together, then get hurt again, because the fundamental base line is: this woman does not like you.
Do you care, what she thinks of you? Should you care? Can you put her into the box of mad old bag but deserves respect as my Dh DM?
I don't know. What I know is in my own situ, we have been down such a long and painful road, an ever present cloud present at baptism, ruined it, wedding same ish, dd's birth, ruined it.....how many more events do we sacrifice up to the altar of people who do not want us to have a good time, who always want to show us something, prove something....let us see how they feel, and we keep inviting, including and getting things ruined....
No one has thanked us for it, we are not getting medals from anyone and yet precious events in our lives are being tainted and ruined.
Its such a hard road, to freedom, to saying this isn't good enough any more and sadly where MILs are involved we are talking about a generation who perhaps doesn't have the time to mess around.
I feel sorry for your MIL that she cant control these emotions, most MILS have them, but are able to reason, control, put them into perspective...some cant, yours cant, mine cant and it leads to a lot of misery.
Your DH sounds wonderful. You have a very precious family unit, it might help you to go to Relate and get some advice on how to deal with this as a family, its so common, they have heard it many times before and they will help you come up with strategies on how to deal with it. Help you both shore up and focus on the family you have both created rather than pandering to the toxic families, and worrying about them. Big hugs to you and your DH and family.