Yikes, what a mess.
I think your husband has done the right thing, by not letting her come over. If his ex lets MIL into her home and your husband can't get his ex to cooperate, that's a problem. But if your stepdaughter is only with her mom every other weekend, you can still control a lot of what goes on in your own home.
I would not allow anyone in my home who called any woman a "super cunt" at all - and I'd say that anyone who refers to any woman like that is likely to say it about me or the child, or allow others to say it. Your husband needs to tell her that's not an acceptable word at all. If he has a really good relationship with his daughter's mother, they could work together to decide that this word is not acceptable and that Grandma will be told the mom knows she uses the word (though perhaps not to refer to the mom - that could blow up).
The lavishing of toys is designed to stick it to you and your husband. You know that, right? So ideally, the bio mother would tell MIL to knock it off, that it's excessive. But no matter what, those toys and clothes stay at Mom's, and your husband should tell his mother why, that he will not allow her to intentionally and routinely hurt a 5 year old boy and, by extension, his wife and himself.
He did reduce the time she spends, and she took it as a slight. And it was! It was a clear message that she's out of line. I would also stop telling her when all the practices and games are, although you shouldn't stop her if she shows up. Creating a scene won't work. If she slights your son, however, your husband needs to step in. Again, it would be nice if your husband's ex would see that excessive gifts and attention are creating a problem of expectation, and of being nice to someone because they buy stuff - that's an absolutely terrible lesson for anyone, particularly young girls we want to raise to be strong enough to resist the "flowers and candy" type of man. And if there are other grandchildren who are also being slighted, that's a broader problem. It's interesting that other family members feel you should just leave her alone. Is that what she does with other grandchildren? I agree with the other relatives that you can't make her want a relationship with your son, but you can absolutely not subject your son to this rejection by having her around. Your daughter's answer, if asked when her games/practices/events are, should say, "I don't know - you'll have to ask my dad." And again, ideally the Mom will not share the schedule with Grandma. If things become uncomfortable for your stepdaughter, then it's time for everyone to tell Grandma to call it quits and stop enabling her.
I would say that the daughter should be helped to see this excess and find ways to donate the toys to needy children - and tell Grandma that's what's happening. (I don't mean to put the child on the spot, but to have your husband say that stuff isn't coming into the house and both her and bio mom agree.)
Re the bath - a 9 year old doesn't need help at all, and Grandma should not be in the bathroom with her at all, period, end of sentence. Children this age need to have privacy and independence, and Mom should prevent Grandma from being in the private spaces of the home. If Grandma is helping Mom financially, it may be hard for the Mom to say no to her though. But still, every other weekend shouldn't be that big a burden for your family.
Your husband should watch the "work things out" thing because it's giving his mother all the power. A simple rule that she cannot come to your house or pick up the daughter at school or take her for gymnastics at all. If you have to, tell the school that the child is not to be dismissed to Grandma at all. Let the school handle it if she shows up.
You're doing the right thing, staying out of it. I'm sure it's very hard. I don't know if this is a rejection of you, or her bizarre way of protecting her granddaughter from the big change of getting a new brother, or what. You can't control what she feels, only your children's exposure to it.