I can empathise with your situation, and all I can say in reply is to give you the benefit of my own experience.
How did I deal with the hatred? Nothing would have worked, as I think it was her own self-hate, or whatever, projected onto me (and others). She refused to visit or be visited, so I just had to let it wash over me, and get support from those close to me.
How did I keep the relationship going with my son? By showing I was there for him, accepting that he only got in touch once every few weeks, without castigating him for that, and keeping conversation non-confrontational. The most I did to push him into phoning would be a little text, which usually resulted in a reply, usually when he was able to be on his own.
How did I prevent my grandchild being out of bounds to me? Being hundreds of miles away, I accepted that he would bring her maybe just twice a year. By not making a fuss, this wasn't denied, even also for the step grandchild, though I think any contact with DS's family perturbed DIL a lot. Skyping didn't really work TBH, so it was difficult.
How did I deal with her seeming acceptance of a more distant family member? I realised it reflected their being much less of a threat to the control and manipulation, so had no problem with it.
What did I say to my son about the situation? I knew he was treading on eggshells at home, and on edge, and, as you say, frightened of upsetting her. However, while he was leaving things unsaid, I couldn't interfere in a marriage, and just took his news about what they were doing, where they were going etc at face value. I read between the lines of course.
How did I deal with arrangements for visits? Once it got to the stage of being clear that DIL wanted to avoid us completely, we abandoned ideas of visiting the house. My DD arranged to visit for a couple of hours when in the area, and it went down like the heaviest lead balloon you could ever imagine, with DIL refusing to even be present. I always gave DS the choice of coming up here, or meeting in the middle or us staying in their area, and he always chose to travel. There seemed to be such a lot left unsaid that eventually, after two years of this being the situation, I stated that I was sorry he had to do all the travelling, but clearly she wanted nothing to do with us, and it was always up to him when and where he saw me, because I understood how difficult that was and must upset him. He agreed, and it was clear we all appreciated seeing each other and spending time together. Even after two of these sensitively (probably over-sensitively) broached conversations, without me actually criticising DIL, he still didn't admit to what it turns out was extreme unhappiness in a situation that amounted to being bullied. It took 4 more months to share properly. Although this made me feel awful, I think it was right not to interfere until he asked for support. I will not go into what happened since, as hopefully you DS's situation is not as severe.
Pinksweetpea, I hope you will appreciate that spending the time writing this shows how much I do get how you are feeling. I know my situation is different, and yet it is also similar. My advice would be to step back as much as possible; speak out only when you have truly considered what to say; continue being pleasant etc etc. Remember that the apparent hatred probably reflects that you are important to your DS, even though he is finding it hard to find opportunity to show it. Otherwise, she wouldn't bother.