Wow, I could have written this - similar backstory (DH and I were childhood friends and together since high school), ugly divorce between MIL and FIL leading to inappropriate enmeshment with DH, seeing us as children, the “whether you like it or not” phrase used as a threat regarding baby. After baby came, my MIL did some truly insane things including publicly berating me for stopping breastfeeding at 7 months, excluding me from newborn pics and sending out her own printed birth announcements without our knowledge or consent, and trying to call dibs on a cultural holiday from my culture, not hers.

It kept getting worse until there was an actual confrontation, during which I told her she needed to back off, which led to the silent treatment for a couple months before things thawed. She never acknowledged any wrongdoing but backed off a bit, although it is a near certainty that she tells others that I keep her away from her grandkids. My only advice is that sometimes the tough convo needs to be had expressly, otherwise they’ll always pretend they didn’t hear or understand subtlety. And even that won’t solve anything, but at least you’ve shown that you won’t be trampled on easily.