You have been on my mind since I read your story Monday night. I couldn't wait to get home from work tonight so that I could post this. I understand what you are going through and what you are up against. I would like to share what worked for me, and hopefully it will help you.
Read the Bible. It will help you spiritually and make this seem so small!
Lessen your contact with her. The less contact you have, the more peace of mind you will have. Don't email her, or call her, or explain yourself to her. You are only giving her ammunition when you do. If she calls, let your husband talk to her. If anything gets started, she will have her son to blame, and that isn't going to happen! If you are in a position that you have to talk to her, show her what you are made of. Show her respect (even if she doesn't deserve it), show her consideration, and show her kindness. Don't let her get you in a heated discussion or an argument. That is what she wants so that she can continue her abuse. Try to live your life without worrying about what she thinks or does. And if she tries to go through other people (mainly family members) to get to you (she probably will), try to react in a calm manner, and say something like "Oh well, if that's what she thinks", or "She's entitled to think whatever she wants to", or something along those lines. It seems from your story that your husband doesn't protect you from his mother. So, you have only you to protect yourself from her.
I know this isn't what you had in mind when you got married. She will keep on doing this as long as you keep responding negatively to her. That is just the way she is. You cannot change her, but you can change how you deal with her. It will make you feel stronger and more in control of things. You will have your power back. You will have to rise above this, and not let her drag you down. The more you are in control of you, the more she will up the ante. You have to remember that this has been going on for 17 years. She will fight to keep things as they are. She needs this chaos. And if she starts being nice, watch out. This may be a ploy so that she can reel you back in to where she wants you! Just keep your distance and stay out of it. Even if it's about you. I have seen all the cons, all the manipulations, all the lies, all the vindictiveness, and I would have never have believed one person could be so negative and destructive if I hadn't seen it and lived it. No matter what she does or says, stay strong and respond nicely and off the topic. Smile a lot and laugh when possible!!
I have read a couple of books that first opened my eyes to this. Toxic Parents by Susan Forward and Toxic InLaws by the same author. The reason why I recommend Toxic Parents is because they were toxic parents before they were toxic inlaws, and it gives you an idea of how you husband may have grown up, and why he relates to them the way he does. I have been online reading about the personality disorders, like narcissists, sociopaths, etc. It helped me to learn that these people have no conscience, no empathy, no compassion, yet they expect this from other people. Please read and learn all you can about this. You cannot change what has already happened or been said, but you can do better starting now. I wish I could put down everything I could think of, but there isn't enough space for that! Live well and be happy, and don't let anyone take that away from you! Feel free to respond, and let me know how things are going.