It certainly sounds that way 
Do you think that, if you stood up to her even once, it would be enough to instigate long term change? And I mean really stand up to her, no contact at all - even dd?
I don't want to bore you, but I wondered if this might help.
When I was a child (certainly no older than 3) there was a massive argument between my mum and dad and maternal grandparents. Grandma was a bit of a narc, grandad just did anything to keep he peace. She had been causing trouble all of mum's life, real pita, controlling, manipulative etc etc.
There was a "straw hat broke the camels back" event. She and grandad turned up at our house with grandma demanding to see DSis and I (only grandchildren) and my dad forcibly stopped her from entering the house. He slammed the front door so hard that he broke it. Grandad ushered her away, I can still remember he looked so angry, I'd never seen him like that before.
As you do when you're a child, it was one of those memories that is way at the back of your mind and I never really thought about it again.
It's only in the last few years that the memory has surfaced and I've spoken to dad about this, and he told me what happened afterwards.
There was nc with grandma for a month, grandad was furious with her and made her apologise. He blamed her for creating a situation that could compromise him seeing his granddaughters.
She was still a pita, and the arguments didn't stop completely, but they were greatly reduced. According to dad, she knew that it would be far worse for her than it would be for anyone else if she stepped out of line again, so, like your mil, she was able to control her behaviour. And she realised that, in order to get what she ultimately wanted, she had to control her behaviour.
Fwiw DSis and I utterly adored grandma and grandad. I miss them every single day. But that relationship would not have been possible if grandma had been allowed to treat DSis and I in the same way as she treated my poor mum.
I suppose I'm writing this to try to offer you some hope. It took mum years (33) and a bloody supportive spouse to be able to stand up to her. But things did change. I'm not sure the FOG ever left, but the dynamics of the relationship changed and, once grandma knew that she was not in control, her behaviour started to change.
Sorry, that was an essay 