Oh, my! My first thought was that your mil and fil should not watch the kids. Then I thought thru the examples you gave and am thinking that it might be safe for them to stay with her under certain conditions. My third thought was that your husband grew up with them and trusts them. Does your husband use common sense? Has he told you any "horror" stories from when he was a child. I also wonder about their ages and physical and mental capacities
First, I would not let them stay alone with the in-laws while camping. Camping is an iffy situation anyway with young children. At 4 and 7 they are still impulsive and require more supervision in a camp ground than they do at home. And.....their grandparents are at work and have other responsibilities as well.
I would also be hesitant to let them stay with anyone who is an alcoholic. Alcoholics can be unpredictable, i.e. the fight, and they are not at all good in an emergency. Even when your mil is sober she could be put in a position in which she would have to divide her attention between her husband and the children.
I became a parent in the mid 80's and learned quickly how different the world had become since I was a teen. My parents and us kids knew everyone in the neighborhood and my parents wouldn't think a thing about having us go next door to play. I wouldn't let my daughter go anywhere until I got to know the adults in the house even when she was older.
It's different still now in the early 2000's. I haven't let my granddaughter play in the neighborhood without my being outside with her until this past year. She just turned 10. Even now she can only play with the boys of the family that lives right next door because I know them and their parents. If there were kids her age in the neighborhood I would go knock on doors and get to know the parents so that she could play outside with the kids.
My daughter lives in an apartment complex with a playground. She won't let her kids play on the playground unless an adult she knows and trusts is also outside near the playground.
I do understand your concern about your mil's common sense. I'm just saying she may be more naive than lacking in common sense and it's something to check out.
As to the beer in the car, it is a concern but it is only going to be a problem if you're in an accident or violate a traffic ordinance or law. I've been in a car with a couple of cop friends who brought their can of beer with them to the car. They've been willing to take that chance. I wouldn't be so hard on her for doing that. I would just tell her up front that you don't want to have an open container in your car and ask her to not get in the car with it. Now, it would be a problem for me if she argued about it instead of just taking it back into the house or tent or?
Because your husband doesn't agree with you and is making you out to be the bad guy, I'd look for a way to compromise. And perhaps you can do this by having a discussion with hm emphasizing when his parents can be around the children. You've said it's OK for them to visit in your home. Emphasize that as a way for them to be together with your kids. I'd also add that they could babysit while they visit you and you go out to dinner with the strict rule that the kids are to stay indoors or whatever you're concerned about. Perhaps they could play on the playground or at the park as long as the mil is with them.
I would not trust anyone outside the house, who is an alcoholic or who has more than a couple of beers or glasses of wine, alone with my kids. I have a very good friend who does handle her alcohol well but she is an alcoholic and I would not leave my grandchildren with her even at their age now, 7 and 10, and even if they were going to stay in the house. She has had a stroke as well which does influence my opinion of her reliability.
I'm careful to not mention visits or being together or doing things to my grandchildren unless their parents have already told me it's OK but I do think I'm in the minority there. It also sounds like your mil has reason to believe that the kids will be coming to stay. It's important to decide upon a boundary and state it early or if you're undecided tell her that you're still thinking about it or that's it's not a sure thing yet.
From what you've written I wonder if boundaries with the grandparents are not well defined and that, understandably, you want to avoid hurt feelings. I've found that the sooner you state what you expect the quicker the hurt feelings will go away. Say things as we statements, meaning your son and I have decided that we want the kids to stay home with us this summer. You don't have to give a reason for the summer plans.
You will want to address the issue of when is it safe to leave the kids alone with them at some time and the sooner the better but I'd wait until later so as to not get the issue of this summer confused with the rest of the time. By doing this, you've given yourself some time to work out the long term picture with your husband.
I suggest that it might help you negotiate with him if you use a different way of talking about this with him. Using I statements is one important way to word your concerns. Instead of saying, they're not safe with your parents, say I feel anxious when they're with your parents. Word things in a manner that does not sound critical of them. Also be sure to bolster your husband so that he can state his feelings without feeling the need to defend his parents.
I suggest reading about a way of communicating called non-violent communication. It's about a way of being and talking that allows the other person to feel comfortable instead of defensive. Their is a web site for it under that term and there is at least one book written about it.
An added thought. My daughter has sometimes been upset about my allowing her kids to do something and we've agreed that when I want to do something out of the ordinary I'll call and ask her about it first. This has been working enabling her to feel more comfortable with what I do with my grandchildren. I've tried telling her that if she would say "your grandchildren" instead of "my children" I'd feel more invested in listening to her. Both refer to the same children and she doesn't lose power by calling them grandchildren. She doesn't understand. lol another example of the generation gap.