
Hi earl, first, what a shame this is causing so much tension and upset in your respective households, and second, you really must--for your little daughter's sake if for no one else--be the one to take the lead.
Your little girl can't know the background to this story, and you can't let her happy childhood be spoilt by picking up on adult rivalries. You say your husband is one for a 'quiet life'--I wonder if he hasn't simply realised after all that it is his father's choice, his life and yes, he may be in a relationship with an exploitative, unlikeable woman--but that's his choice. I have to say I think your husband has done the wisest thing by accepting the situation and not forcing his dad to choose between his partner and his children.
This won't be what you want to hear, but you would completely disarm this woman by not rising to her bait. Let her be called Aunty--it won't be the first time a child has had someone in its life who may or may not disappear on them, and your father in law might feel so much happier with this small concession--he's obviously aware enough of your feelings to make the effort to call round on his own every week to see you, and he may be getting some grief from his partner every time he does. He's in a very difficult position, but he is trying hard to make it work for you all.
Families can be damaged permanently through these very challenging relationships--I should know. My mother's parents were very well known in their field, and their house was always full of high profile visitors who came from around the world. Her father was the epitome of the absent minded professor and my grandmother was and had to be solid steel. I adored my grandmother, an absolutely formidable woman in every sense till the day she died at age 98. I found out fairly recently from my mother that my grandfather's very conventional, high Victorian family detested her--she was far too forward, too good looking, wore unconventional, bright clothes, went to university, worked as well as raising a family and didn't hold her tongue with spiteful relatives. They did everything to make her life a misery--they first ignored her, then tried to persuade my grandfather in any way they could not to marry her, and then finally transferred their attentions to the children in the same way. As luck would have it this was Germany and WWII interrupted their activities. My grandfather was in a POW camp in Russia for most of it and my grandmother had to raise three children on her own--two of her children were hit by stray gunfire when the Russians came into Berlin and no one was there to help her. After the war they moved from Berlin to Hanover, where my grandfather took up his professorship. By the time I was 8 or 9 in the early 1960s my grandparents had taken in the latest of a succession of university student lodgers, and this man stayed for the next nearly forty years as my grandmother's companion. You can only imagine how this affected everyone--he was more than 30 years younger than she was for a start, never mind the fact that my grandfather was under the same roof. She and my grandfather lived during the day together as they always had on one floor, with the lodger in the attic, but she and the lodger shared a room at night upstairs. They went away for long holidays together while my grandfather travelled on his lecture tours. He was totally obsessed with his academic world and was never quite 'there' as a parent, and quite probably still less as a husband.
As children we instinctively were aware that this was a highly unusual family and household even for the 1960s, but I can honestly say we never discussed it or were made to choose sides because the adults always treated each other with outward respect.
As a teenager I lived in my grandparents' house for months at a time and became quite resentful of this man--he was very clever, always knew best and always had the final word. I was angry that he assumed the place my grandfather should have had. It took me many years to realise that it wasn't for me to judge why or how my grandmother made her choices, and whether I liked him or not was irrelevant--all that mattered was that I loved her, and she and my grandfather were happy with the way things were. When my grandmother died three years ago it all finally boiled over--my mother and her sister felt he had usurped his way into the family and were very upset that he wanted to make the funeral arrangements, their brother didn't want to start a fight over it and was seen as 'being weak', and so on and so on. When this man started a new relationship it only convinced them that he had only ever wanted to 'get whatever he could.' I believe he did love her very much but I know my mother is only happy that she will never have to see him again.
So please, let your father in law make his choices, even if they fly in the face of reason, even if he chooses a partner who is in your opinion a devious shrew. Don't make your family choose sides, don't let jealousy poison your family and above all, let your daughter grow up to have her own understanding of who this woman really is. If it is so painful for you to be in the same room, why not ask your husband take your daughter out with them while you do something enjoyable for yourself? I can promise you that once you make the decision to stand back in this way this woman has no power to hurt you, but the alternative is to fight your way through and risk losing more than you can imagine.