Please don't see her again tomorrow. Your DH needs to speak to her before she is anywhere near your son again.
Don't let her dictate how you parent.
How ironic she is manipulating you while accusing a baby of being manipulative.
She doesn't just sound stupid, she sounds cruel.
Not a chance I would be putting my son in a position where he has to spend any more time with her than is absolutely necessary.
She doesn't deserve a close relationship with your children because she is cruel and labelling your son with harmful descriptions while also making your daughter the golden child - all kinds of toxic and harmful. And no good for anyone. Making you anxious, causing tension between you and DH, trying to make your son the 'bad' one and your daughter the 'good' one.
Being a parent means putting your children first. Hold onto that and make decisions with that front and centre. She isn't an appropriate adult to be in a position of influence in their lives.
The fact you did what she said when your baby was crying for you (I understand you were caught in the back foot so went along with it without time to think) shows she has no respect for you as a mother and no regard for your son's wellbeing.
You don't have to have her in your home alone without DH there to act as a United front or deal with her ridiculousness himself. Please don't put yourself through that tomorrow 