I think this, OP.
I think DH’s silence towards his mother needs to be challenged. If he won’t, maybe you should? And obviously you’re not doing it in a demanding more money kind of way, but pointing out the hurt of her blatant favouritism and how that’s shitty and yes, causes divide.
Yes, I would be taking that message loud and clear, and be reviewing the level of involvement with, and support for, her moving forwards.
The kids will find out, surely, they’d talk, no? I’d be tempted to out her to the kids and discuss the behaviour, using it as a learning opportunity. They are adults after all, they surely know unfairness happens, I think they should know who it’s coming from in the family! Let them decide what they do with that info!
Sure, grandma can do what she wants, but perfectly valid to be hurt by this on their behalf.
Like to say, she’s got form… 🤷♀️