its really tough when someone you love is so negative. I don't think you should cut them out completely - unless they are totally toxic. I think you need to stand your ground though and not get so caught up in what they might think of you. Its possible to love someone, do things differently and have different opinions. You need to work on being confident enough in yourself, so whatever she says or does doesn't effect you.
It doesn't matter if she says what you are doing with your kids is wrong. There are many roads in parenting. wink You can just tell her we do it differently, I don't want to hear any more about it. Smile politely and go about your business. It may be a power struggle for her, or even a justification of her own choices. It might be hard for her to watch you do it different as she might be second guessing her own decisions. Instead of thinking you might be onto something, she might just try and put you down to propel her own sense of worth.
You could take a break from seeing them for a while and get clarification of what you want out of it all, then come up with techniques for dealing with it. It sounds like she is running you all ragged and as a family MIL included, you need to tell her how it is and stop letting her walk all over all of you. She may have issues, but a family needs to say that is not acceptable, can we help you in some way or provide help for her. Not put up with her bad behavior out of fear of how she may act.
sounds very rough. I hope you find a way to start fresh in the new year so you are not only comfortable but thriving in your new found family role!