I agree with Hmmmmm that OP and her husband should stick together, literally and figuratively, at the gathering at SIL's for the holidays. If SIL or her husband cut OP or treat her poorly, OP's husband should be in a position to see it himself, and address as needed that *he* will not accept such behavior towards his wife - it should not be addressed as a matter of OP's perceptions since SIL has already tried to play the "OP is wrong/crazy in her perceptions" card.
I am wondering how the discussion between OP's husband and SIL went from OP's husband saying "we will not accept this treatment" to SIL saying "she is crazy" and why OP's husband did not respond "we are not crazy, and I have seen you ignore my wife."
Since there are family members beyond SIL and her husband and children (MIL, other SIL, spouse and children) I can see why OP and her husband would want to move forward in a way which allows for family gatherings, and so long as the SIL at issue demonstrates at least a minimum of polite behavior towards OP that can work. It doesn't require OP and SIL to develop or pretend to have a close and caring relationship - but anything less than basic civility from SIL should not be left unaddressed in future, and OP's husband should be vigilant in ensuring his wife is not mistreated further.