Hi A.,
Here's an idea. Take the freakin'disposal, but return the installation for cash. Pocket the cash for whatever you want (an xmas gift for yourself, perhaps) and take the disposal to your new house with you or sell it on ebay.
Or see if you can keep the installation until you get your new home (especially if it's a really good disposal and the house you're buying is not new) and have it installed there.
Or, tell your husband you appreciate her generosity, but you would rather put the money towards your new home, but you don't want to hurt her feelings, so you don't want to tell her you're going to return it for something else. Tell him she will still be doing a really "sweet" thing for the two of you and it'll make her feel so good to think y'all actually installed the thing. And you want to send her a lovely thank you and feel really good about it.
Girl, I had the same problem with my MIL. She knew how to get to me in a way that my husband was oblivious to. He would say, she's just an old woman, don't be bothered. Or that's just the way she is, or she didn't mean anything by that. She is the ONLY thing we ever fought (notice past tense) about. We almost got divorced, but instead my MIL is simply not invited back into our home.
I can't really offer you any advice. It just worked out for me, b/c they ARE really old, they live in Scotland and traveling is difficult for them (they used to come for a month at a time!) I just want to validate you. I used to feel the same way - that people just didn't understand, b/c everything she did was small. But in combination, they were huge. I started a bitching and moaning blog for my own sanity. It was my little secret and no names were used.
Let me give you some examples of what she used to do: Everything American is terrible (that was her way of insulting me under the table, so it wasn't directed to me, per se and everyone would think I was just so sensitive, but I knew exactly who she was insulting: history, right?).
This is just one lunch my husband, me, my mil and fil had. I was using a fork to cut my pizza, b/c my other hand was busy with my 6 mth old at the time. I don't know how you Americans can eat like that she said. I said nothing. My oblivious husband said, Oh, yea, mom, actually, Americans think the way we eat is rude (which I never said). She was furious and screamed WELL, I THINK THAT'S RUDE! pointing to my plate with her fork - classy. Her face was red. I said nothing. Then my husband began talking about nose surgery he had years before. He happened to have a different girlfriend at the time. My MIL chimed in with what a wonderful girl that was. She took such good care of you, etc, etc, freakin' etc. She's never had a kind word for me. I said slightly sarcastically, she sounds wonderful. She said very loudly, and emphatically BY GOD SHE WAS! with every ounce of hate in her voice. My husband, still clueless. I happen to know though, that my MIL told that woman that her son would never marry her - sweet. Next, dessert. My husband says well, there's this, that and pie. Honey, she says, YOU HAVE THAT PIE! She did not want me to have it. He says Mom, I think there are two pieces. THERE'S ONLY ONE PIECE AND YOU HAVE IT! There wasn't anything out of her mouth when I was around that wasn't a dig at me. And then, very cunningly, when I wasn't there, she would compliment me to my husband, so she could say, what? I don't feel that way about her. She's so sensitive.
She turned all of the dishes upside down in the cupboard. She would clean out the dishwasher at the end of the night with a towel, iron everything including socks, underwear, etc, and then tell her husband how lazy I was for not doing those things, but only loud enough for me to hear, not my husband. Grrr!
The thing is, she was so good at getting me and she wouldn't stop until I got mad and blew up or started playing her game back and then complained about how awful I was. It was shocking.
If I had to continue being around her, I would stop complaining to my husband, b/c they just don't get it. And start letting her show her true colors. If she is anything like my mil, she will up the ante when you don't respond to her jabs. She will work long and hard at getting to you. In the meantime, try to let your husband know in a non-threatening way, what she's up to. Tell your husband, you didn't know what your mother meant when she said this or did that. What does he think she meant, but generally act as though you don't understand, not as though you're mad in any way. Kill her with kindness, not to do the right thing or any of that nonsense, b/c that doesn't work with people like this. I've tried it all. I mean, if naming your baby after your mil doesn't do it, nothing will ( I still regret that, b/c it didn't work)! Do it b/c it will infuriate her. Do it often in front of your husband, so he can't blame you for being the bad guy and watch her freak out. It will make her crazy when you lavish her with love and affection. The true beast will emerge. You'll enjoy it and hopefully, she'll screw up and show her true colors to your husband. There was nothing more rewarding than when my husband finally started to see what was going on seven years later even if just a little.
I hope that helps in some small way. Just know, I have been there and it is so hurtful, especially when your husband doesn't get your back. If he had, even in private, she wouldn't have gotten to me so badly. Try not to let this affect your relationship too badly. Reach out to others who understand and will validate you, so you don't go to your husband for comfort. I don't think they're capable of understanding when their overbearing mothers have them wrapped around the proverbial finger. The good news is overbearing mothers do sometimes make really good husbands for us if you can work out this little kink. Take care.