My heart goes out to you!!
You are very, very blessed to have a husband who stands up for you. His love and respect for you is clear. As terrible as it sounds, many husbands (and wives) do not stand up for their spouses with a disrespectful mother, because they are also afraid of the mother's disapproval. This woman has gone wwwaaaayyyyyy beyond the tolerable limits, from what you've described.
The truth is, you will not be able to make your mother-in-law happy. Ever. Nothing you do will work. She could have a change of heart some time in her life--a road to Tarsus kind of experience--but you can't prompt it.
So, the question is, does your husband want to see her? If he is also past the point of wanting to be with her, then let him cut her out of his life, or tell her that this is what will happen if she doesn't follow some very specific ground rules involving respect. Then, follow through. Make her leave, or you and ALL of the kids leave (not just your son), and deprive her of a visit with grandchildren. I doubt the threat alone will change her behavior. Following through with the threat might. In any case, she will have received a warning and chosen the consequences by continuing her disrespect. That can help ease the guilt a nice person like you feels over cutting her out.
If your husband doesn't really want to cut her entirely out of his life, must he see her in your home with you there? Your mother-in-law's behavior has the consequence of limiting the time he can spend with her, and makes it inappropriate to have her in his home. He can visit with his parents in their home.
Drinking will just add fuel to the fire, and you already know that.
Let us know how it goes.