You must have the patience of a saint! Given MIL's loathing of her other DILs, I'd have to agree that she is a lost cause.
I have my own problems with in-laws. MIL has never really liked me as before I came along, DH used to spend quite a lot on her, taking her away on hols and so on (she divorced DH's philandering father a long time ago and he left her high and dry). She expects to be treated like a bit of a princess and her children are her whole life (never had a job). Equally, my BIL and especially SIL have always been a bit hostile, as over the years DH has paid their mortgages, put them through college, etc, and funnily enough, once he got married they found the money dried up a bit. Nothing to do with me, DH just wanted to start a family of his own, but of course they all blame me.
SIL in particular is insanely jealous of what she thinks I have - perfect husband, 2 lovely babies, nice home as I'm a bit of a homemaker and like cooking etc. She, on the other hand, is a bit older than me, has a great career as a TV presenter but is so emotionally stunted that she can't keep a relationship going for more than 5 mins. One minute they're getting married, the next she's PG, then he leaves her, she has an abortion and then has a nervous breakdown. This has happened 4 times now (although only 1 abortion to my knowledge).
Ever since DS was born she's been making snide remarks about me not bonding with him (rubbish), and how she could really have a great relationship with him as she's so good with kids (also rubbish). This all came to a head 4 months ago when DD was born, and MIL was staying with SIL. I had a c-section, baby was underweight, and we were in hospital for a week. We invited MIL to see DD as soon as I got home. Apparently this wasn't soon enough as we received a series of ranting phone calls from SIL telling us how selfish we were, followed by a letter from BIL telling DH I was a failed mother having never bonded with DS, that DH and I were selfish beyond belief (this from a man who has been financially bailed out by DH several times), and that DS was "developmentally retarded relative to his peers, obese due to forcing onto solids too early, and insecure as his mother makes him clingy". This man had met DS twice, has no kids of his own, and is gay, so not a lot of experience of kids generally!
As a result MIL just never bothered to visit, never called to say she wasn't coming, and since then has never met DD. She rings DH now and acts as though nothing ever happened. As far as I'm concerned none of them will ever set foot in this house again - if they all want to stick together denigrating me and my family then they can shove it. The funny thing is, the only reason we ever saw them in the first place was because I used to encourage DH that he should make the effort - he'd decided years ago that they were a bunch of self-obsessed takers who weren't worth the effort.
Sorry to ramble. Life isn't a dress rehearsal - don't waste time trying to change things you can't. If your MIL is that bitter and unpleasant then do you really want your children exposed to her anyway? I couldn't care less that my kids won't know their aunt, uncles and granny, as my own brother and parents are so wonderful with them, it more than makes up the difference.