I'm one of those who advised the op to back away a bit from her mil, but I didn't suggest cutting her out altogether. I just suggested that op stop trying so hard, as it isn't working.
Sometimes when one person steps back, the other moves forward. Maybe if op lets go a little, her dh will make more effort to include his mom. Or mil and family will make an effort to see gd at mutually convenient times. If mil suspects that op has backed away because of her (mil's) bad behavior, perhaps mil will consider honoring parental requests from then on.
I think some gps feel as if they don't have to watch out for their gc's health and safety because they're not the parents. Some of them feel that as a gp they can do whatever they want and leave the worrying up to the parents. Op's mil could be like this.
But I don't believe she deliberately "coughed all over" baby. It probably happened involuntarily. The problem is, imo, that she chose to be around baby, knowing she had a virus. But some gps, I think, are very selfish when it comes to their gc. They are so busy getting their needs ( to see and hold baby, etc) met that they don't think about their gc's health, etc. I'm NOT saying ALL, but there are a few like that.
If she has gone as far as to try to interfere with op's job as well as endanger her baby, op needs, imo, to keep herself and her baby away from her as much as possible. Of course, that will hurt mil, but she will have brought it on herself by being a detriment to them both. This is not the same, Yoga and Smielless, as your own situations, and I hope you can see that.
And yes, she has mentioned the rest of dh's extended family, Yoga, because it seems they have all been difficult and disrespected her as the mother. She needs a break from all of them, imo. Again, their doing, not hers.