We lived several hundred miles away from both sets of grandparents, so we didn't have the opportunity to be close to either set (we saw them once a year for a week; but sometimes my dad's parents would come visit). Your mother-in-law kinda sounds like my Grandmother (my mom's mother). She was very proud of her children's and grandchildren's accomplishments -- bragging over any award, piano recital, etc. that we got -- she and her neighbors were constantly playing the "my grandchildren are better than your grandchildren" game. But she was not very involved in our lives, nor showed much emotion or attachment. But that was just her personality. She was distant and reserved -- for whatever reason (in her case, perhaps that her mother died when she was 6, and was too scared to *be* a good mother?) -- and that was just normal for us. (Our other grandparents were also rather reserved and "old school" so we didn't really see any contrast between the two sets -- that was just the way grandparents were.)
I agree with your husband -- his mom may be able to make small changes, but there is no magic wand to change her into your loving, doting grandparents. And that's okay. Accept her bragging to her friends and leaving gifts as the way she shows love, and accept that she is to uncomfortable (for whatever reason) in being more demonstrative. She very likely had some great deal of hurt in the past which is making her unable to act like you wish. Accept; forgive; move on. Explain to your children that when Grandma comes to their school plays, she is showing that she loves them. Teach them that different people respond in different ways, and your parents are very lovey-dovey and demonstrative of affection, while his mom shows her love and affection in a different way. Don't teach them that their grandma is inferior to their other grandparents -- just different.
Maybe she's just scared that something will go wrong -- a child will get hurt -- if they spend the night with her. Maybe she thinks the kids will be too rough with her furniture. Maybe she just likes her peace a bit too much. She may have some other emotional issues, and it's just easier keeping her grandchildren at arm's length, rather than facing the real problem.
You may wish to gently explain to her that your children would like to see her more, and ask if there is anything you can do that would make it easier for her to see them. Perhaps if you phrase it in terms of, "is there anything wrong?" or some other question, you can open up a dialog that will be mutually beneficial. But don't hold your breath -- you know the cliché about "old dogs and new tricks" -- well, your mother-in-law has had several decades of being the way she is, and it may take another decade to see any great change, if she ever changes.