E.J.
Hi Deanna!
I think you somewhat answered your own question....what reason do you want your mom? Because they are special and more so when you have your own children. There is a bond that is hard to replicate. Your SIL has that.
I agree with the other poster that in some families there is an unwritten rule that the mother is closer to the daughter and her children, and puts them first. I guess if we all had mothers that did that there would be no problem, but we don't.
What does your husband think? If he is not a support of the behavior you see, let it go.
You don't need to be confrontive about it. It doesn't sound like she is ganging up on you or being passive aggressive (sorry if she is, write us about that too), but that she is just not meeting your expectations and then this hurts you. Stop asking her to participate in your children's lives, she doesn't want to. As time goes by when she asks you or your husband why the invites stopped, you can be honest with her and say, "You never came". An honest consequence for her.
By 5 your daughter will start to notice Grandma's inconsistentcies and draw her own conclusions. Better that she sees Grandma for what she is without any negative influence (but with your unconditional support for what a bummer the truth is about Grandma). Maybe this won't even bother your daughter...kids have such low expectations of others anyway. Has your daughter said anything?
Families are not just DNA, and truth is all people will not live up to our expectations no matter what the title. We have to learn to: 1)accept them the way they are, and 2)ask what benefit does the family gain from investing in a relationship with them? If you cannot accept them "as is" or if the benefit is more hurt then happiness, then you have your answer.
Sorry to seem harsh...I have a mother and she is mentally ill since I was a young girl. It was very hurtful to be let down by her over and over again. When I adjusted my expectations I stopped being hurt and was able to let her be the Grandma (to my kids) she wanted to be (not the one I wanted her to be). I know it hurts. Good luck in what ever decision you make!