While I understand that it’s less than ideal to have someone drinking secretly in your home, it doesn’t sound to me that the drinking itself is causing any direct problems. Obviously you cannot leave her in charge of the children, but that is not the same as not allowing her to stay at all.
My mil is a (very) high functioning alcoholic. She absolutely wouldn’t recognise that description of herself, but come 6pm she will drink at least 1 bottle of wine. This happens every single day. Only very occasionally is she noticeably drunk.
But she is also in her late 70s, not physically that well, and very lonely. We have talked about it and decided that ultimately, it is her choice if she drinks every evening, if that is what she wants to do. She may not have many years left, and while the drinking may shorten that time, it’s wholly her decision when she isn’t causing any direct harm to others. Stopping drinking would make her much, much sadder.
As such, we never let her look after our DC. But we let her spend plenty of time with DC, simply with one of us present. She occasionally offers to babysit while we go out, and we politely decline. Pretty sure my SIL does the same, though we have never discussed it.
My mil has a lovely relationship with her grandchildren. She plays with them and reads stories and chats to them etc. She loves them and they love her. We just never leave her in charge.
I guess what I am saying is that you do not have to stop your mil from visiting and developing a relationship with her grandchildren. You just have to not leave her alone with the kids. It is entirely up to you if you want to talk to her about the drinking, perhaps a gentle “we know you are drinking. We aren’t going to tell you to stop but we don’t want you to hide it as that’s causing us to worry more.” And then basically leave her to it.
I do know some will think that you must intervene, but she won’t stop simply because you ask her to. And in the end, it’s a matter of autonomy unless it’s actually affecting you and the family. And you can easily tell her she’s making too much noise slamming the doors at night - just don’t say you think it’s because she’s drunk.