Just tell her. "You are a liability to my daughter... from your experience with overdosing and having trouble functioning, I just don't feel it will ever be appropriate to allow you to be the sole caregiver of my child in these instances. I would be concerned that my child would get into your pills and overdose herself, and that with your mood swings and health issues, you just aren't able to cope with a young child without me there right now."
Really, you can beat around the bush and then have to give excuses every time she asks... which will hurt her feelings over the course of time, or you can be straight with her. She already knows she is a dangerous and crazy person, so telling her will hurt, but it will the the truth and she deserves to know it. When she freaks out, the good part is she lives several states away.
If anyone else has a problem with it, then ask them how they would feel if your daughter was hurt or even died from an overdose or something else by this woman who is out of her mind. Legally, the child's parents could be held responsible if they knowingly left the child in the care of a person such as this. Just tell protesters that and maybe that will shut them up.
And ps, this is your mother in law, your husband should be the one putting the reigns on the woman. If he can't man up and deal with it, and expects you to cater to her, then he needs to put his big boy pants on and do the week alone visiting her himself.