Dh thinks I should be a grown up and forgive her. ....
You should "Forgive Her".
Huge red flag here.
Bickers post regarding his position between his parents and his wife is correct.
Your husband should be forefront to protect his wife.
IMHO, I cannot envision going to movie or a restaurant with my DH and him not being sitting beside me???? I am seriously wondering just where is your DH in all of this.
These kinds of things are never inlaw-issues, they are Marriage Issues.
It is NOT wise for you to deal with your husbands mother alone.
It is NOT wise for your husband to put his mothers feelings ahead of his wifes.
If your MIL actually called you derogatory words and said "I am done with you", Then HE should be the one contacting his mother and calmly asking that she apologize to you, or he and his wife and children would not be seeing her again, and inviting any more of that unacceptable behavior.
You have mentioned how your faith has come into play here...
Well, the Bible says that a husband and wife are to be as one...
If somebody insults the wife, the husband should also feel insulted as well.
He should want to protect his wife as his own flesh.
The Scriptures say that a man and woman should leave their parents and cleave to one another.
I am speaking from experience here.
My FIL treated me disrespectully. My DH who had always been close to his parents expected me to 'forgive' and 'be the bigger person', etc... Well, finally the time came when FIL let loose with comments similar to what you are describing, and worse.
I explained to DH that this would be the LAST time that I would see his FIL.
I explained to him that this was a HUGE problem in our marriage that he could purposefully subject me to that kind of disrespectful and verbally abusive treatment by his father. I told him that I had just set my limit, and that it was OVER.
As far as how to handle it with your MIL, as has been mentioned in other recent threads... JUST WALK AWAY. Who cares what 'she experiences'???? Don't bother letting her get to you.... Again, WHO CARES!!!! Believe me, once you catch on to this concept, it is sooooo freeing!!!
If it continues to be a 'situation', then inform you DH that he must be the one to deal with it. Do not let him hang you out to dry by leaving you to deal with his mother who has stated that she 'is done with you'.
I would not have any further personal one-on-one contact with MIL at this point.