I have just RTFT and am amazed at some of the comments you've been getting from people regarding being overly precious and people not normally washing hands before touching babies etc.
Pre jabs, you really should limit babies having contact with people especially if they have not washed their hands. No kisses due to risk. That is the case anyway irrespective of covid. Young babies can become seriously ill due to things like coldsores which otherwise you may not think about.
I should say, even without a baby in the equation, regular washing of hands/using gel is just basic hygiene. Perhaps this is part of the reason we got ourselves into a mess with covid, if people's hygiene levels are so low.
It is also not good for babies to be passed around like a gift. How does that benefit the baby? It really doesn't. You shouldn't feel pressured to let people hold your baby just because they want to. Is it in the child's interests?
When my baby was little we only saw immediate family for the first couple of weeks then had a few visits from friends but spaced out and with a hold/cuddle but not in a being passed around manner - there wouldn't be many people in a visit and they would sit with her for a while. This was better for her. They always washed or gelled hands first at my request. No kisses or touching face.
This is (or should be) normal.
Above all else, as a parent you're going to need to speak up for their best interests in the face of pressure and adversity. They're going to also face that themselves when older and should be confident to say no to enforced cuddles and kisses if they want to. MIL will have to just deal with that as will anyone else. Noone has an innate right to physical contact.