The first thing you need to do is get Toxic Parents by Susan Forward.
Secondly, you both need some time to let the heat of the emotion cool. Parents have a unique crack into the depths of our hearts and the emotions around them are pretty strong when things go wrong.
One of the most important things is your daughter. If she is verbally aggressive to your daughter's father, lies and makes threats, she is no good grandparent. The indulgence she may show to the little one is very likely to come at a price. Basically, if she cannot show respect and be civil to the little one's father, she cannot be trusted to show respect to the family dynamics including the little one.
She might be less of a loss to your daughter than you think.
Also, close friends and aunts can hopefully step partially into grandparental place. But even if not - better an absence than a poisonous presence.
Okay, your husband's siblings. With respect to them, how they react and who they 'side' with, if sides have to be taken, is their responsibility. They are adults, as is your husband. Your husband isn't responsible for them. Also, they may well be highly fed up themselves of lies and distortions and threats.
Fourthly, his feelings: this is really difficult. The Toxic Parents book may be pretty enlightening. But encourage him to allow all his emotions space - guilt, sadness, anger. You have to go through them before you can come out the other side with a clearer sight of the reality of his mother. You never loose the visceral impact of her as your once-loved parent, but when you see her as an adult then you can deal with her on much more equal terms. Especially, gently encourage him to see her as the person she -is- rather than the loving mother he'd like to be. Questions such as "do you think this is what a mtoher should do" may help (thought it's a bit loaded!) and especially "do you think you would ever act that way to your own daughter".
About making a scene - yes, that's awful to endure . All I can say is that you will survive and that trust me, most people will feel sorry for you landed with such a relation, rather than blaming you. If it happens, stay calm under all circumstances. Really. Try to see her as a stranger and reply to her as if she was a stranger, as best you can. Staying calm is by far the best way of defusing the situatoin in the long run. If she sees emotion from either of you, she'll scent victory.
The counselling is a good idea, but only if the counsellor is truly neutral. If your husband gets bad vibes from them, don't go back. But it would be a good idea to find another, maybe.
If he asks you if you shoudl reestablish contact, say no. Not unless or until she can genuinely apologise and see what she did wrong. If that point comes, you can reconsider. Until then, no.
essay over =)