Long one, apologies.
My SIL (husbands brothers new wife) has always caused a bit of drama in the 6ish years we've known her, she 'says it as it is' and is very much her way or no way, will walk into your house and tell you everything she doesn't like, find fault in anything and cause an argument about absolutely anything. Myself and my husband tended to just ignore it, bite our tongues but eventually would end up taking the bait and falling out, not talk for a while. Once they had a child the cycle would end with us giving in first and apologising for whatever she deemed necessary so we could still see our DN and keep family happy. After several cycles of this happening and the last argument being so ridiculous we decided to give up with them a bit, not continue to play her game, and just leave them to it and be available for a relationship if they stop being silly about it.
(I won't go in to the arguments as it would be outing, but 100% we aren't in the wrong, affirmed by several other people, plus the fact she has fallen out with half the people she's met).
We've left it with saying that we are happy to be civil and see each other for family sake, we obviously miss our DN and our children miss her a lot, but its been made very clear we aren't allowed to see DN and SIL doesn't ever want to see us until we apologise and a long list of demands.
Sad but it is what it is, we can't live our lives playing along with her drama, especially as its become clear her and BIL don't care about our children who they used to see regularly.
Now the issue is just before the last fall out they moved to the town where we've lived for about 8 years. We happened to go to a kids place at the same time as them, SIL made a big scene about leaving because we were there. They now seem to have realised that raising children in the same town its quite likely for this to happen again, and have been sent a list of places/events that we aren't allowed to go on certain days in case they to, even the school they plan to send DN to to make sure we don't send our DC there! I personally don't care if I see her, I'm happy to be civil and say hello, or just ignore her, but I do now feel anxious about her causing issues for me
FIL and MIL clearly arent happy about the behaviour but doesn't get involved as to be honest it would backfire on them, and they are very close to DN. Any communication between DH and BIL seems to go through her so no chance of speaking sense to him, he also seems stuck in the middle.
AIBU to think the person with the issue should be the one to avoid the other? Any tips to manage this? If we do whatever she wants to 'make up' it will all just be repeated a few months down the line, we've been there before.