Addict ex wife wants kids, signed away full custody voluntarily, mother-in-law pushing me away

My husband, (of 3 years), has an ex wife. I have an ex-husband as well, but he has never been in the picture. He and I had 2 children together. My husband's ex signed over full custody of the their 2 children to him in the divorce. She doesn't pay child support either. She cheated on him for over half of their marriage, and their youngest is not my husband's child. She has been in and out of jail, and a rehab, for quite some time. I was, myself, a heroin addict. I have been clean for 5 and 1/2 years. I have understanding for her situation. However, she has not only gotten out of going to prison for a car-load of heroin and cocaine (the other girl got a 7 year sentence), but she has also gotten away with a meth lab (boyfriend got 10 years, she got 6 months in rehab). She has stolen money and other items from every member of her family, she wrote statements to the police department exclaiming that I was selling drugs out of her ex husband's driveway (not true), told her 4-year-old daughter that she would kill me if I touched her (we live together), and even killed a pregnant girl by running her over. Normal people would have been drug tested, breathalyzed, and thrown in prison for vehicular manslaughter. She didn't even receive a citation. Her 2 children knows what it looks like when someone gets their throat slit. They were with her at a trap house.
Two weeks ago, she stole money out of her dad's truck. My husband's mother is trying to push me out, and bring her back. Being a former addict, I can spot someone using a mile away. The kids were staying the night with her dad while she was living there. I had told them that she was getting high (from just comments from the kids), and no one believed me. That's when their home was raided for a meth lab. I know she is using again now. My husband's mother has invited her to her son's birthday party, again. I feel that if the ex wants a party for her son, she should have one. Instead, my husband's mother is paying the ex's way to the party. She originally wanted us all to go in the same limo. I would have driven separately. What can I do about this situation? I love his kids like I love my own. I do not want to leave them, or the love of my life. However, this is a common situation that continuously occurs. Those kids love their mother, but she is not a safe person to be around. My husband's mother does not seem to understand the severity of this issue. If she knowingly allows (when she babysits) the kids to go over to the ex's (she does), and something bad happens, his mom will get child endangerment, and he may as well. I am extremely worried about their safety, but my husband and his mother just seem to shrug it off. I have told him how I feel, but he just replies with, "The kids still want their mom". I tried to argue that safety comes before what they want. They are our children. Children that young don't understand the difference between "want" and "need" yet. He has the last, and only, say in their up bringing, yet his mother sneaks around behind our backs. We find out later, from the kids that they did something with their biological mother. We both agree that they should be allowed to see her, but only supervised. She is no longer part of any family (her dad is always invited to holiday celebrations, birthdays, etcetera). So, I feel that my mother-in-law has no place in inviting her to this birthday party, let alone any other occasion. If my husband wants her there, then he will invite his ex. Am I wrong in assuming this? I have read many articles on etiquette towards an ex, but none of them seem to cover this situation. Any opinion would be highly helpful. Thank you