I am a new first time mom, so I may not know too much about babies just yet -- but mother's-in-law I know VERY well.
My mother-in-law sounds very similar. My advice is to first make it clear to your husband that this is an important issue for you. Pick a time to talk about it when you can be kid free for a little while and it isn't immediatlely following a situation with the MIL -- this way neither of you are fueled by the situation.
Now, I know that some people feel it is important for you to talk with your MIL about your concerns, but I truely feel it needs to come from her son. Until he sits down and presents a united front with you, you will never get anywhere. My experience is that no matter how much your MIL may like you, you will always be the hussy who stole her baby boy -- which means in a disagreement, your opinion doesn't count.
My other suggestion is to have a plan, which you and your husband agree on, in place prior to visits. This way, you know how you will handle things if MIL is treating the children differently.
The sad news is the situation will most likely get worse before it gets better. After YEARS of struggling with my MIL, she is finally starting to act more like a normal person -- but this was after her son finally told her that until she started acting in a more sane manner and started treating me with more respect, he wasn't going to be able to speak to her.
Just so you don't think I'm an terrible person who just dislikes here MIL for no reason....
Crazy things my MIL has done:
1) Insisted her son visit her at least once a week (by himself)
2) 4 days after my wedding told me that she didn't know why she allowed her son to marry me (and I was the girlfriend she LIKED when he was dating)
3) Called me a F*** B*** on Christmas eve and told be to get the hell out of her house. To this day she claims she doesn't remember saying it.
4) Got so upset she wouldn't talk to us because we didn't put our son in enough of the clothes SHE bought for him. -- She knew this by looking at the pictures we sent out over email when our son was a month old (and basicly lived in oneies).
And I have MANY more stories like that.
Good Luck.