Actually, I think the wisest course would be to stick w/ the low drama, and just stop inviting SIL anywhere. She has declared the animosity--it's sort of disrespectful to continue issuing invitations.
Explain this decision to everyone else you have in common w/ her (family, friends, etc.).
Say, "we want to respect her wishes, out of respect for her. And so we aren't going to put her in an awkward spot anymore, where she has to be rude to her hostess in order to stand by her principles. Please don't discuss our parties with her, since we won't have invited her. It wouldn't be polite to her, of course, to do so."
And tell MIL, "If SIL would like to stop this feud, she can do so at any time. We are not interested in prolonging the rift. All she has to do is drop it--she doesn't have to apologize, she doesn't have to become best buds. She only has to be mildly pleasant when we see each other, and drop the animosity.
"She probably does owe us an apology, but we've decided that her financial anxieties are hard for her to handle, and so we're simply going to forgive her without asking for an apology. But we're not going to extend that forgiveness until she indicates at the next family gathering at your house, that she is done being angry.
"Oh, and we're not going to be apologizing to her either."