This situation sounds all too familiar. I can relate on so many levels, from the religious issues, the jealousy, the wedding drama, and now your predicament. I know exactly what you are going through and why you feel torn. I also worry I know how this will play out.
We also made a huge effort to reset when we had our first child. I had been ignored for the full duration of my pregnancy due to it being out of wedlock, yet I offered an olive branch two weeks before due date by asking the MIL for help setting up a nursery, in the hope it would re engage her again and prove how 'worthy' I was. The first year of my child's life was full of instances of us reaching out and nothing being good enough for them. They complained about our baby all the time - didn't smile enough, didn't like what time they had a nap, didn't like my breastfeeding over bottle feeding, the way i faced the pushchair, even about how much contact my family had with the baby - which although it wasn't more was still nothing to do with them...literally everything we did failed their expectations. I tried to brush it off but it wore us down. My husband is lucky as he has three siblings. He is lucky because, he has seen this situation play out when they have multiple children. One of his brothers has, like you, cut us off and hates us over this. Another has, like you, had a similar timelines with marriage and children and seems more competitive about it. We were constantly compared to them as parents and our children were compared also. But his third brother has suffered the same treatment as us. And it is because of this, and seeing someone else received this unacceptable and toxic treatment, that we realised we did not have to put up with it anymore.
We want this to end now. We don't want a relationship anymore. It is not healthy for our children to witness their treatment of us. It will cause more confusion and upset than if we don't see them at all. We can offer a great foundation and a secure and loving family for our children. We do not need these people in our life - they have only hindered us and caused overwhelming stress for years. We are not standing full bullying and abuse anymore, and I think teaching the children that its okay to set boundaries and not accept mistreatment from people whether they are family or not, is the best gift you can give them.
I hope that you find a way through this, but it sounds like you would benefit from stepping back now. The grandmother helping you reunite has good intentions, but has found herself playing the 'rescuer' role in the drama triangle (look it up, really helped me) and could benefit from keeping out of it in future.
We have only decided not to bother with DH family since lockdown last year, so its been easy for us so far. I have loved not having their drama, tension and confrontation in my life. I feel free of it. I just hope we are strong enough to keep saying no once this is all over.
I hope you make the right choices for you, and remember if you decide not to bother with them now, it doesnt have to be permanent. I lost a relationship with my own father for ten years, and he is back in my life again as of 2018. This is because I set my boundaries and needs from the relationship and had lower expectations. I don't particularly enjoy his company still, but I have benefitted from building brilliant relationships with my half sisters, which is worth it for me. Things have been made better since taking a break, a step back, and building back again slowly when I was ready.
Good luck and keep focusing on you and your lovely little family x