my 2 cents is to stay comletely out of the MIL thing. That's a person who isn't going to be reasonable. As Kettricken wisely said, (and I'm paraphrasing), it ain't about you. So anything you do will be used against you, and that will probably include doing nothing, but doing nothing is the best route when dealing with a controlling toxic parent.
That's a big ole "damned if you do/damned if you don't"...so why put yourself through it and have any drama. Let H handle it. It's probably an empty threat about the house anyway. Staying cool will just make her look like more of an hysterical idiot anyway.
