It seems to me that it all boils down to extremely low self-esteem. When you already feel like you are "unworthy" any small comment, even one not meant at all to be unfavorable, is heard as an insult. In turn, they lash out, hoping to protect them self from the "attack" that was just made against them. After they lash out and hurt the other person, they see that hurt and feel worse about them self. So, to protect them self from that added bad feeling, they must tell them self that they were justified, that the other person WAS saying something "bad" about them. Over time this happens many, many times until they have demonized the other person so much, that they become a demon in their mind. They are expecting that other person (who isn't at all being like they think) to attack them. We all know what happens with "expectations" here on the board! Never good.
My W has told me over and again that she just "couldn't trust" me. Let me tell you, I was about the most trustworthy H you could ask for. My life was centered on her and my family. What I think happened, what she couldn't trust was who she made me into in her mind. The person who made her feel bad about herself. Not because of anything I did but because of how she felt about herself. In turn, they now must build a case that this hurtful person is really the cause of the pain they feel inside....hence the changing of the past, the only remembering the "bad" times, the blaming. The problem is the only one who can change this dynamic is the person who is the least capable. They are where they are at because of how they feel about then self and what they need to understand is that, once again, this is all happening because of THEIR problems. More of them being at "fault". Easier to see yourself as a victim of the other person "making" them feel bad. Add in someone who tells them how they are right to feel this way (OP, in my case my FIL) and they now have back up that they are a victim. A VERY bad dynamic! First they have to see that this other person (who has now made them feel good about them self) isn't telling them the real truth, then they have to understand that, once again (in their minds) they were "wrong". They have to come to terms with the fact that they have demonized and blamed someone who didn't deserve it...making them the "bad" guy, the "wrong" one all over again.
You know, thinking this all through, it's a wonder that ANY of these people EVER wake up. So much easier to stay in the tunnel. I think the reason it takes so long for them to come out is because they need to realize that any future R is just going to end up with the same dynamic. For that to happen they are going to have to see the same scenario play out all over again from the beginning. It took a long time for them to get to this point with us, it will take time before they see it again.
In the meantime the LBS's entire life is turned upside down. The kids suffer. They leave a trail of destruction behind that they will need to come to terms with. A lot considering they couldn't handle the give and take of a normal R! Kind of puts the enormity of the odds against ever getting things to be good again!