Wow... sad story.
Like Thandie I finally forgave my mother for all of the terrible things she has done since I was old enough to remember (Yes folks she is still a nasty person to this day, not just about childhood.). She never said she was sorry but during what will most likely be our last conversation she had a moment where she actually thought about someone's feelings other than her own and said, "That must have really hurt you. That was awful." ...which is really close enough for me to an apology. My mother was diagnosed with colon cancer several months ago. She is also diabetic so her time on this planet is coming to an end sooner than later.
Bottom line is even though my mother was a terrible person and a lousy mother overall she did give me a lot of positive life lessons: hard work, truthfullness, loyalty, and because she never EVER apologized or admitted she fucked up with us I learned that as a parent it is MY JOB to apologize to my kids when I fuck up. Was hard the first time, but I do believe that the first time I apologized to my oldest child for a situation where I was waaaaaaaaaaaaaay out of line (She was no more than 5 if that) began a lesson whereby I will be able to forgive my oldest child for the serious wrongs she has done (and will still do) when she is ready to apologize...
OK, I'm rambling but if your MIL is truly a burden on your wife (sadly, your balls are cut off here. YOUR WIFE has to deal with her mother - period - end of story) and is messing with her head badly enough that it affects HER MOTHERING YOUR CHILDREN then your wife needs to reassess how she deals with HER MOTHER. IMHO anything that causes a parent to parent less than the way that they feel they should be needs to be dealt with ASAP.
Stileto - I hear what you are saying but not one of us asks to be born. We don't owe our parents shit for bringing us here or for taking care of us. They owe us because it is a selfish act to bring even one child here. They didn't do anything spectacular by taking care of us. They only did what they were SUPPOSED to do.
Children don't owe their parents. It is the parents that owe their children.