As you haven't commented since this morning I am guessing that you have reached your own conclusions, which are that you have no intention of changing your mind - which is of course absolutely your perogative.
However, just in case you are still reading these replys, I want to tell me my viewpoint - which I think is fair enough to do, as you were the one to open your post to all Mumsnetters.
I tĥink that your MiL was really out of order to say what she did, and as a HT her way of thinking is slightly worrying in so much as if a child came to her - maybe because they were sent to her for misbehaving in class - did she have enough understanding of a childs psche to know the myriad of reasons why any particular child may be behaving in a certain way?
But back to you @TheChristmasSchedule2026, just because an adult behaves in such a way - in any way, good, bad, or indifferent - it does not mean that when somone else's standard of reasonable behaviour does not match our own, that we have to lower ourselves to their level, in reponse to them. I presume that your MiL is about 68 years old, give or take, and I hope that your MiL gave your DH the best childhood that she could, and that therefore your DH was a reasonably well adjusted adilt when you met him?
If that is the case, and your DH still wants contact with his DM, I think you are being rather cruel to your MiL for not being willing to invite her and your FiL - if he is still on the scene, to your home over Christmas, whether that is just for Christmas Day itself, or longer if appropriate. If your MiL still has her heart set on doing the Christmas Day hosting, for what I suppose could be her last year of being both well enough, and young enough, to undertake doing so, could you not find it in your heart to be the more mature, and kind adult, and tell her that sadly you can only visit for one day this Christmas, but you and her DS would love it to be Christmas Day itself, as it is has been so long since you were all last together on Christmas Day?
I am asking you to please do this one kind thing over Christmas this year OP, especially as I know from my own very difficult experience (as a DiL at Christmas) how horrible regret is once it is too late to do anything about it...
Edited to say that I started this late last night, but got distracted, hence me not finishing this until today!