One thing you need to pay very close attention to is your gut or motherly instincts. When we have them, I think the tendency can be to brush them off or feel we are being unreasonable. But when we have this sort of gut reaction to someone, it should NEVER be ignored.
Listen to any Police or FBI officer talk about working a homicide case, for example. They will tell you how many cases have been solved by someone's gut feeling that was investigated further.
My point is that your gut is trying to tell you something and you need to listen.
This woman, your MIL, is unquestionably controlling. She is without a doubt being deceptive and two-faced. I experienced these same sorts of behaviours. It is nothing that reads as psychotic but nevertheless causes one to feel uncomfortable. My MIL was a master of only saying the really awful things when no one else was around. She did this for over 15 years, to be exact. Then, finally, she was bitter and jealous at my baby's baptism party and shot off her mouth a little too much and too loudly. So many people called and complained to my husband that he finally had to believe what I had been telling him all along. His belief in me came too little and too late, but that is besides the point.
I was right about the woman all along. My instincts were right. Now in your case, you have additional information about your MIL which suggests there may be even more grounds for you to worry- she was molested as a child. Abuse can tend to carry on from one generation to the next. But even sometimes it can be a matter of your own beliefs or boundaries.
For example, a friend of mine thought it was really funny one time to play with my three month old son's penis when he had his diaper off. She was calling it his "cute little tinker" and just giggling away like it was all perfectly commonplace. My other friend and I said "Keep your hands off, thanks." But our friend just laughed it off as if it was perfectly normal and told us both to lighten up. Needless to say, I didn't let her change any more diapers for my son.
But anyway, the bottom line here is that you are the mother. She had her chance to raise her own kids and since they were babies, the world has changed so much. That's not to say that other generations can't offer some invaluable advice, but stepping in and trying to take over and steamroller you against your wishes--well, that's just something else again.
Remind your husband of the old "divide and conquer" theory, because I really believe that in large part, this could be what your MIL is up to. As for hubby going over there late at night to do stuff, unless it is an emergency, this is taking away from your own family time. He will have to take a stand and say no a few times until she gets it. Of course there is nothing wrong with him helping out his family but his mother quite clearly has more of an agenda here and he needs to see all this for what it is.
Good luck with it and stay strong,
SB