I'd have said something too. Letting family members say awful things in front of children is not acceptable.
Not as bad - but both DH and MIL are incredible 'gossipy' about people's private lives. I've mentioned it to him once or twice, but a few weeks ago they were sitting in a room with my teenage DCs, speculating about DH's cousin's financial situation. As in 'well she has a good job, you wouldn't think they'd have much of a mortgage, her DH will get something when his Dad dies, how much do you think their pensions will be ' etc etc. For about half an hour.
I was cooking sunday lunch but popping in and out. In the end I had to call them out and say it was appalling how they were so nosey about something that was none of their business, and they couldn't possibly know all the wider issues that could affect this family's situation, and why so interested? I said it was horrible and a really bad example for the children. I was really cross, but I don't think they got it at all.
Of course we all do it to some extent - but 'she has a good job, hopefully they are settled financially' was all it needed. Not endless permutations.
The same with your MIL. She could have (unkindly, but humanly) said to whoever she was with 'did you see the lady by the window?' and had a giggle. Mean but probably normal. But taking unauthorised photos and sharing them with others is absolutely horrific! I'm not sure if it is actually bullying as hopefully the poor woman was unaware - but it's way over the boundary of acceptable behaviour, and just 100% horrible.
Good for you for calling her out on it!