I could see my SIL pulling this type of stuff. I could tell you stories that would curl your hair!!!! Thankfully, she lives 1500 miles away, so it is an issue only occasionally, when she comes for a visit. It's pretty easy to ignore someone form 1500 miles away,and caller ID is a beautiful thing!
I'd pay for the rooms, you said you would, and you'd look like a schmo if oyu didn't. I'd make it very clear that you were paying for the room only, and nothing else. I'd fllow your plan that you made up for your family that she seems to think is so funny, and let her stumble along on her own.
And learn a lesson....