You definitely need to read up on narcissistic mothers and flying monkeys. It sounds to me like whatever you do you cannot win, so stop playing the game. Stop getting her to look after the child. Write a letter to all of them, your mil, your brother in law and your husband. Tell them you need to be respected as the mother of your children and the wife of your husband. Lay out in the letter what happened.... Your mil invited your family but excluded you from a family meal.....
You and your husband made a joint decision to decline the invitation.
You mil then sent texts accusing you of being coercive etc.
Your BIL angry at your declining the invitation abused you on the phone calling you a c##t.....
So this is a problem your mil and your bil have created, and its down to them and your husband to fix it. If they dont then simples......
.. You dont want your children exposed to this level of toxicity nor this level of disrespect to you as their mother.
Lay out your boundaries of what you are prepared to accept, you expect civility, inclusion, pleasantness, freedom from gossip and abuse. This is a one time only offer and opportunity. Any failure on their part will destroy the relationship, is that what they want, their choice....... You decide what you will tolerate regardless and in spite of what they say about you. This includes your husband. You can do this without his agreement, you are the mother of the children. Either he will wake up and smell the coffee or he wont but at least you will know where you are...
Send the letter to all of your husbands siblings and mil. if you can get your husband to do the letter with you and sign it, then good. You can email it but just make sure they cannot say they didnt get it.
Lets just say i am no stranger to toxic MIL situation. You cannot fix mil or bil or your husband. Imagine when your mil starts to behave like this with your kids......
This ridiculous course of events surely is enough to get your husband to realise the damage they are causing and his role in it. He needs counselling as he has probably grown up with this drama and brainwashing. You were puzzled by his comment that it is unusual for his mum to not like people... He has likely grown up listening to her telling him that, the "scales are over his eyes"
Im very sorry you are dealing with this. Its all such unnecessary suffering.