I just wanted to say thank you to everyone who responded. Just because you are offended, doesn't mean you're right, so I really didn't know if I was overreacting . . . so I definitely appreciate the reassurance :)
MIL is heading back out of state, the day after Christmas, and we're only seeing her once more on Christmas Day with the rest of the family - so we'll wait to say something till after the holidays, seeing as she won't be alone with him again before she leaves (and we don't want to ruin the holidays for her): but we WILL be saying something, because even my husband was concerned!