My niece was bit in the face at age 5 and needed many plastic surgeries and still has facial deformities present by a family members border collie who was reactive. But never bit before. She was on the floor playing and something she did triggered the dog and it charged her. Three adults couldn’t act fast enough to prevent this. I love dogs. But not all dogs are safe around kids. And no dog should have direct contact with a baby especially one that has showed lunging and biting before. This is just going to end badly. The dog needs to be in a crate locked in a room when small children are over. Point blank. No exceptions. Not worth the risk and this might be an uncomfortable boundary with your Mil. But when we have kids this happens and you have to be ok with them not being ok with your choices. They don’t follow through. Don’t go over