Kimmerz, I've been thinking about the ow situation and how she does not involve herself in the lives of your girls when they are w/their father. I don't think she's jealous or resentful of them, but I do think that she thinks that if she doesn't interact w/them and is just plain rude and ignores them, the girls will not want to come over there to stay. She's a piece of work and the way she is going about w/her lack of initiatve and interaction just makes me think she has an ulterior motive by doing what she's doing.
You have to remember that there is a difference between your girls and their cousin. Your h isn't the cousin's father and that child will be going on and not visiting on a schedule. The ow doesn't have a gripe or concern about the cousin...your children, on the other hand, have visitation schedules, stay over night and yes, money is being paid out to support them...big difference in the way she's thinking. It's petty and rude, but that's the way she's playing the game.
If your xh isn't going by the book and he's content w/them only coming over when he's around, then I would go w/it. As for the ow, the more you try to discuss this issue w/him, the harder it's going to be for your girls. I do think he shares the discussions he has w/you w/the ow. You don't want to give her any more fuel for her fire. She knows exactly what she's doing.
I wouldn't have my children stay w/her when your xh isn't around. I wouldn't trust her and they are not her children and I'm sure she's not being very pleasant to them. I can't blame your girls...I wouldn't want to stay w/her either.
For now, sit quietly because he's not going to "hear" what you are trying to tell him. He's still in the fog of la la land and lust. The ow can do no wrong and it's going to take some time for that fog to clear up. The less you point out the flaws of the ow, the better.
If your girls don't want to go over there and stay, don't try to convince them otherwise as it will create more emotional distress on them, especially during the holidays. If the topic comes up again, you could gently tell him what the girls have shared, but allow him to broach the subject w/you first.
Sit quietly, the answers will reveal themselves when you least expect them to. The past is gone, the present is a gift and you need to focus on today, allow the future to reveal itself when it is ready.