B.P.
Dear L., Wow, you sound worn out by this situation. As wives and mothers we can become so used to things that we get in a "can't see the forest for the trees" mentality.
First, grandmothers seeing their grandchildren is not a right, it is a priviledge. I am a grandmother, and I must respect their father and mother, or understand that they have a perfect right not to expose their children to me. It is their judgement and their children should always come first. Period. Your mother-in-law is a grown up. Often manipulative people want us to forget that and our expectations of them drop lower and lower. Our willingness to accept outrageous behavior goes up. Why? We would not accept these types of behaviors from a friend or other relative, why them? You probably want to ask yourself that. Unfortunately, you will end up in the position of wondering why your husband has not simply said "Mom, we will see you when you agree to behave in a way that supports my wife and me as parents, and human beings."
Here's the deal. Manipulative people go through life setting up situations where they can succeed. They surround themselves with people who enable their efforts. But, like children, they need someone to say NO and mean it. They need to be told that this comment or that behavior is unacceptable. It seems hard to believe, but often they really don't know how what they do affects other people. Usually it is not that they don't care, they just need someone to speak to them, not in anger or judgement.
You need to say how what she does makes you feel. Tell her what you want her to do. She may not respect that, but then there must be a consequence. The one that works best is just not going to her house for a while. Still speaking on the phone keeps lines open, acting like she has nothing to be mad or upset about, because after all you have simply set a limit and are sticking by it. It is a simple strategy, not easy, but simple. Simply empowering yourself and not being afraid of her anymore will take such a weight off your shoulders.
I have not given any particulars here, but you may already be able to guess that I have learned this first hand through pain and tears, and have triumphed with good, trusting and strong relationships at the end. I wish you all the best. Hand tough, this is good practice for your children later. Barb