'Don't make it anti MIL - make it pro Family' totally sensible idea and probably the best way, but in ops position I'd be telling him to grow up and get his fucking act together!
However several things seriously concern me.
Op I think you need to do some reading on narcissism, toxic in laws, yes but ALSO covert incest and enmeshment as your husbands relationship with mil doesn't just sound dysfunctional to me it sounds very worrying!
Has there been no details given around his fathers death at all? Is it just referred to as an 'accident'? If so I suspect a suicide.
Wealth and privilege don't mean it was a happy, functional or non abusive childhood. Certainly appears emotionally abusive to me.
But it cannot be allowed to continue into the next generation.
ALL the children are being emotionally badly treated here.
His daughters from his first marriage are being excluded from his current family (which as a pp put very well can be just as hurtful as it is for the ones missing out financially).
Your daughters from your first marriage are being treated as unworthy, that is NEVER acceptable.
The daughter from the current marriage is being pulled both ways, that is also extremely damaging.
No more!
You're (op, husband, ALL the dc) a family, the mil is a RELATIVE not part of the FAMILY in this respect.
His dc from first marriage should be at YOUR home for post divorce contact. That's for him to spend time with them not his nightmare mother! She could always arrange other times with her ex dil (who also needs to grow up IMO).
Holidays - everyone goes or nobody does! Not only does mil not have an obligation to take/pay for grandchildrens holidays, she doesn't have A RIGHT to either! That's up to husband and the mother to agree to JOINTLY.
Christmas - the years husband has the dc from his first marriage Christmas is ideally everyone at YOUR home. If mil wants to host she hosts EVERYONE!
This utterly nasty exclusion of your dc from your first marriage needs to stop now!
A decent man would be saying to his mother
no! I married op and when I did I became and agreed to be stepfather to her dc. So they're my kids too! We're a family, you take all or none!
Op you're right it shouldn't have gone on this long, but you can't time travel. So you deal with it now.
Good luck.