Wow, THUMB, you've handled all of this with great dignity! I've been following your thread and am so pleased for you that it's unfolding this way.
Well done to you, and to your DH. Calling his mother and confronting her was an enormous step forward for him and for your relationship.
My DH has an incredibly toxic SM. Learning to handle her behaviour took me almost a decade and I was already an adult when she came into my life, albeit a young one. For DH, who was very young when SM and his father married, untangling the impact of her behaviour took a lot longer and lot more work. The effect of her behaviour on her own three dcs is even more pronounced.
Recovering from the impact of a toxic parent takes a long time and rarely straightforward. There is a lot of great advice on this thread from people who have dealt with a toxic parent of their own. My perspective comes from supporting a spouse who is dealing with it.
One of the most difficult things to understand from the outside is how it could be so hard for an adult to stand up for themselves. I honestly believe that when someone is dealing with a toxic parent, there can be a part of them that is still a child. When the parent plays their familiar games and presses the same old buttons, it's not the competent adult you know who responds, but the child still scared that the love they depend on for survival really might get yanked away. Getting past that can take a long time, and watching someone get past it can be frustrating. You might find it hard to stay patient and supportive throughout, and if you do struggle I highly recommend finding someone to talk to both as an outlet and as support.
For me, the first step forward was finally realising that I couldn't stop Step-MIL's behaviour. The second was accepting that I couldn't change how DH responded to it, only how I did. The biggest breakthrough, if you like, was understanding that she wasn't born this way but that she was also formed, most likely by her parents behaviour towards her, in particular her father's. Realising that before she was a toxic mother she was a vulnerable child made it easier to see her as just another flawed human who needed compassion as well a good slap . Once I actually got that it became less personal and infinitely less painful. As her father hurt her, so she hurt her children and passed the legacy on. What we all learned was that this was a cycle and we needed to try to break it rather than perpetuate it.
Whatever the eventual outcome, challenging a toxic parent's behaviour is important and worthwhile. In our family, it's led, eventually, to a certain amount of reconciliation. Step-MIL is now very ill and we're fairly certain this will be her last Christmas. She's still a complicated person, but her hold over the family has been broken and that makes it all so much easier.
Good luck, I hope the Christening is (was?) lovely and that things look up from here on in.