OP here. I don't know how to multi-quote, so I'll answer questions or elaborate as best I can.
Escalation and consequences: Oh, yes, as her behavior has gotten more overbearing, we've stopped inviting her to birthdays, graduations, other gatherings. Only reason Thanksgiving was still an option is the boys were too far away to come home, and the moms had always gotten along all right before. This was the first time MIL didn't have a give-and-take going with my mother. It was unexpected, and we were appalled. We would never have asked my mother to sit through something like that. Very sweet footnote: day after Thanksgiving, I called my mother to apologize, and her response was "Well, you didn't do anything wrong. I felt so bad for [DH's name]."
The handouts (aren't they great?) almost always refer to medical history, conditions, or situations. OK, I know you'll love this, it's why I joined E-Hell: At a situation this past spring she called us over to give DH some medical records from an episode in his childhood. To get the file, all we had to do was give her time to read us seven single-spaced pages of an overview from her notes at the time. We expected that, and figured let's make her happy for an hour. Top of page five, she asks one of us to take over reading! (What shot through my mind was, "Oh, your arm is tired from beating me, and could I just wield the strap on myself for a few swings?") Stunned, non-participatory silence from DH. Then MIL asks me by name to read it, and I found a polite way to say no. Undeterred, she carried on.
All the responses are definitely helping me fine-tune this. Those who mentioned narcissism nailed it; her behavior pegs every quiz even when we try to minimize the answers. She will not change. But the observations posted about taking the lead in this dance, and all the direct and polite responses suggested, will give us a chance to cope with it should she behave this way again. We're also ready, sadly, to stop any contact with her that isn't necessary for her medical, legal, or safety needs. I feel so bad for her.