OP I'm glad things have calmed down a bit, but I don't think this will be the end of this.
Your DH has demonstrated that he is emotionally and verbally abusive towards you, and he will escalate things massively to avoid having to conflict with his mother.
I'm sorry to say, I think it will happen again. Keep that timeline of events that you prepared, in a safe place.
It might also be worth agreeing some ground rules about your MIL in general, and sleepovers in particular, whilst your DH is still contrite. Am I right in saying this was DC's first sleepover at MILs, despite her trying for the last 2 years, and making a concerted effort in the last few months?
So they've tried it, and it wasn't a success. I think you are well within your rights to say no more sleepovers with MIL. She is free to come and visit, but no sleepovers.
I think this has also shown that it's not a great idea to give them the choice. YOU decide what is best for them, and for your family. They are too young to make a decision like that.
I'm sure the DC have picked up on the fraught emotions, so I think you need to spend lots of time cuddling and reassuring them.