"Strange how walking on eggshells can feel so normal to women in these situations."
This is a big sign of a bully, and that your friend is in an abusive relationship.
I think she needs you very much, not just for this situation but for the future.
As far as the unfairness of the wills goes, she must see her Solicitor and write her own will independently of and without discussing it with her 2nd husband. Her Solicitor will advise her, but it sounds as though she is entitled to half of the property. However, if he outlives her, he will probably claim his right to live there. The Solicitor will advise.
I am more concerned about
1] 'she has been* talked into* the division of assets as two thirds to his two children and the remaining third to her one child,' despite her 50% contribution.
2] 'DH is now refusing to discuss, and adamant this will not be changed.'
3] 'strong element of coercive behaviour there from her DH'
4] 'some physical abuse'
Coercion, refusal to discuss, physical abuse and the alteration in her behaviour so that she is "treading on eggshells" are all such serious signs of an abusive man that I really think she needs to get rid of him. Sooner rather than later.
I am very glad she has you. Give her all the support you can. Well done.