MIL and Grandparents "Rights"

Okay, I'm writing this because I need opinions on what to do in our current situation.

A bit of history: I've been with DH for 6 years. We have 3 y/o and 9 m/o boys. Prior to getting pregnant, my MIL and I have never really got along. She's overbearing and very clingy with DH. Acting like a drama queen over the smallest things and just causing constant stress in our lives. Blaming me for "taking away her son" when I've never done anything to stop him from seeing her. But, after getting pregnant we all decided to bury the hatchet for the sake of the kids. I have been regretting this decision ever since. 

During the past few years she's overstepped her bounderies several times. A few of my "favorites" have been... Insisting on me circumcising my son, she's made jokes about calling CPS (for example if we were watching something on Dr Phil about a drug addict parent she would be like, "Oh if you guys ever did that I would be calling CPS." Which is an empty threat because we are good parents...but it still bothered me), announcing the birth of our first son on facebook, pressuring me to announce my pregnancy with my second son because she didn't know how much longer she could keep it a secret, posting passive agressive posts on facebook that are obviously directed at us, posting pictures of our kids to her 600 aquaintances on facebook even when we've asked her to stop (she then blocked us from seeing her pictures until I mentioned it. She denied blocking us. And then we were magically able to see her pictures again). Less importantly, she does the typical annoying MIL things like calling the kids "her babies", saying how much they are like her sons, accidentally referring to herself as"mommy" while she's talking to them, etc. I have always just bit my tongue for the sake of everyone's happiness. DH isn't the most forthright person, but when he does try to say something to her she plays innocent and it gets swept under the rug. 

I have never let my MIL watch our kids alone. I just don't feel like I can trust her because of how manipulative and disrespectful she is. This obviously doesn't sit well with her and has been something she constantly whines about. She also constantly complains about not seeing the kids enough even though she visits more than ALL of our other family members combined. Although I wont let her take my kids, I've never stopped her from visiting. My latest favorite passive-aggressive comment she made to me was, "My friend was a helicopter parent. Now her son is a drug addict and criminal." I almost lost it on her for that one.

Our current issue: Last Sunday we had our son's 3rd birthday party. She attended and everything went well. That night, she posts on facebook that she's signed a petition supporting "Grandparents rights". With her post, she adds a caption that says, "I am a grandparent that would hate to be in a position to have to use the law but I would if I needed to. It would hurt too much not to have access to my grandkids. My friend took it to court and won access." DH and I figure this is her way of sending us an indirect threat. So we deleted her off facebook to put some space between us while we decide how we are going to handle this situation. A few days later she messaged DH asking why we deleted her. He told her, and her excuse was, "I don't recall posting anything on facebook other than just loving my grandkids. That specific post was just to support my friend who went through this." Yeah right. DH just stopped responding after that message. Then last night she messaged DH and said that she thinks we should all sit down and talk. His response was, "There is no point in talking because you never feel like you've done anything wrong. You never respect anything I say to you. We aren't friends on facebook and that's how it will stay. I suggest you never say anything regarding court and our kids ever again." She didn't respond.

I live in Ontario Canada and have talked to a lawyer to see what rights she has. She has none. She could take us to court for visitation, but wouldn't win unless she was able to prove that she's a beneficial influence in the kid's lives and has a strong bond with them. The most she would probably get is one day a month for a few hours which is way less than she sees them now.

She's not technically a bad grandparent, because she doesn't do anything directly harmful to the kids. But I do worry about her being a toxic influence in their lives as they get older. There has been many times where I've wanted to leave my boyfriend to just get away from her. 

So my question is, where would you all go from here? Would you allow her to continue being in your lives? Cut her out completely? Am I over reacting? Sorry for the novel and sorry if some of it doesn't make sense. Trying to write while being attacked by the kids lol.