Since mil doesn't really seem to want you and dw in her life, perhaps ghosting would suit all. But ghosting means you just slip out of someone's life without letting them know why. Maybe dw would say, mil "should know." But, imo, it might be better to at least write her a brief note, send her an email, saying that since she seems to be pulling away from you, you've decided to let the relationship go altogether.
I know, she'll argue that she still wants to see your dcs. You - or better, dw - will have to let her know this isn't possible. How would it work? If she has no relationship with you people and vice versa, how does she think you're going to transfer dc back & forth?
Goind nc won't stop sil from trying to visit or influence you. In fact, she might redouble her efforts. Dw might have to break off contact with her, too, and let her know that, as well.
At the extreme, you might have to move and not give even mil your address. But I hope it doesn't come to that.
In fact, I hope that dw decides that lc is good enough and that it isn't necessary to go full nc. Perhaps you and she can simply advise your dc not to discuss accomplishments with this granny, just to have fun with her, etc. But idk if that would help or if she would still find a way to hurt them. Dw, surely, knows her mum better than you or I. She needs to figure this out. Trust her.