Yes, we have that too, but not with mil/pil, they're lovely and treat all gc equally... It's my mum, adoptive.
My oldest is 8 yrs old now, and she has always been in the shadow of her cousin and cousins. We have more kids now, no4 is arriving next month.
To be honest, my daughter had never noticed, it just goes straight over her head, thank god. It's been me who's struggled with it over the years, especially as I feel it's 'history repeating itself'!!
But, my adoptive dad died 6 yrs ago, we were close, but it changed everything. Adoptive mum began to be less interested with all the grand kids, adoptive and her own.
So, it's less of an issue now. And I've let a lot go, life is too short to get twisted up in knots,
I dealt with it by distancing us to be honest. And we have our own loving family, a large one too, and that is enough for us.
Mil/pil are lovely and the rest of my husbands family are.. Also, I have my very much older brother and sister, who weren't adopted... And they are wonderful too, and my children love them dearly.
So, don't let it get to you... She sounds rather unpleasant to treat kids that way... It takes no effort at all to be equal with your affections,
Please don't worry about the effect on your kids. Hopefully it'll just go over their heads, like mine.. But if not, just distance yourselves... Self preservation.
It is really sad.... As mil is missing out, and more importantly your kids are missing out. But, focus in other people who do make the effort.
Life is too short to get twisted up by other people's failings!
You will never ever change her,,,,,, you need to change how you deal with it.