Mil was the same after DD1 was born. Ringing us first thing in the morning, waking everybody up, grabbing the baby out of her crib without any consideration whether she was asleep or not, turning up at our house 5-6 times A DAY!!
After lots of rows with Dp, he finally had a word with her, she cried and paddied for a few days, then the situation went exactly back to what it was before.
When DD2 was born, I had a very firm word with her. I upset her big time, I upset myself as I hate confrontations, but at least she left us alone to recover and deal with the sleep deprivation. I made an effort by taking teh DDs to Mil's house a bit more often, and it's been working out ok-ish (I still can't stand the bloody woman, but make efforts for the sake of Peace).
She still wants the DDs for herself, calls herself "mummy" from time to time (eeek!), stuff like that. What makes me laugh though is that now our DDs are older, they don't want to be stuck with her, don't really want to be cuddled all the time etc, so firmly tell her.
I hate confrontations, but sometimes it's the only way forward.
YNBU by the way...