Good lord, your wife is 100% right and I am surprised she's lasted this long.
What can you do when your mother is mean? Stand up to her. Here's your script.
I only read through the first half dozen items your mother had said - and to be honest I could not read through the rest. Yes your mother treats people terribly. Most loving caring mothers do not insult others.
I think you are not hurt from this and cannot comfort your wife because you have never been shown a true caring and loving parent. Most husbands if they saw their wife in so much emotional pain and crying would run over to his wife and hug her and console her with kind words - reaffirming how sorry they are that she is hurt this way. You seem incapable of having empathy for her feelings - you have never been taught this. It seems normal to you be spoken to in a hurtful way - NORMAL mothers do NOT do this!
Normal people do not call others retarded for anything! Forget about something dumb like not wanting to taste a certain food item. Threatening to kill someone? Again normal people do not do that even if you do not mean it. One does not talk like that - it is mean and cruel and wrong.
Your wife has already told you what she wants from you and have not done it. Your own words: "She (my wife) has been telling me that I need to set boundaries with my mom and that I need to defend her more."
Your response is lame - ". But I've said things to my mom. She told my wife that she calls everyone retarted but still my wife can't seem to get over it.."
I really wonder what you said to your mom - I doubt you said anything direct like mom, you need to stop saying hurtful and insulting things to my wife. I love her and if you continue we and me will not come over and visit." that is saying something to your mom and setting boundaries - and then you follow through - if you are over there and she says anything hurtful and say I will not have you speak to my wife that way - and then turn tail and leave.
This is not for your wife to get over --- no one should be treated that way and spoken to that way.
Quite honestly I think you need to get counseling so you can learn to have empathy for others.