Molly, your example (inviting friends to dinner) isn't a great analogy because it doesn't even involve family.
The situation here seems to be to be much more similar to that of SillyBilly's family, in that the OP's husband's ex ISN'T primarily the OP's husband's ex within the wider family context. She's a much-loved member of the PILs' family: the mother of their GC, possibly a valued aunty, & so on.
Of course OP may not enjoy being in her company - that's natural enough. But to expect everyone else to cut out a family member is totally unreasonable. Why should one's person discomfort in the presence of another trump the feelings of all those who do want to see this woman - especially if we're talking about events organized by the PIL / GP.
And as OP herself has acknowledged, she needs to get used to all this because with older stepchildren she's going to be in this situation an awful lot in the future. Or do you think her DH's children should have to exclude their mum from future weddings, parties & so on, just in order to be "sensitive" to their stepmum?
We all want to be treated sensitively. We don't all expect people to write their loved ones out of important events just because our relationship to them isn't a comfortable one. There are people in my extended family I'm not keen on, but it wouldn't occur to me to expect them to be excluded just to make my life easier.
You said that you'd absent yourself from family events if you were the ex, Molly, but why would you do that? Tact & diplomacy is one thing, deciding that your ex's new relationship somehow invalidates several of your own relationships, & their history, is something else.