I agree with the others, OP.
The first thing to remember is that if you don't want a major family fight, you stand your ground WITHOUT judgment or opinion. In other words, you say, (Like others have pointed out) Joe - if you have an issue with my kids talk to me and I'll discipline/handle/deal with them. Please do not scold them directly.
Then move on. Do not dwell on how he treats his kids differently (opinion) don't dwell on his relationship with his mother (judgment).
He'll probably say something like, "they're too loud, then. Quiet them down." or "they shouldn't play with those toys" Then you'll have to deal with that. Either defend your kids by inserting YOUR parenting style here (don't get into a back and forth about whether they are quiet or not "They are actually playing quietly") but more along the lines of "Joe, this is the way I like them to play, so I'm going to let them continue at this level." or "Joe, these are the toys I brought, so they will continue with these toys. If you have a problem with it, you and I will have to come to some sort of compromise."
your MIL. the next time she calls your kid the devil (WOW!!!!) again, without judgment or anything, you need to say "MIL, do NOT call little Danny the devil. I will not be able to bring him for visits if you do." That's it. No anger, judgment or anything. and KEEP REPEATING It. every time she says it. "MIL, as I mentioned before I will not have you call my son the devil." if it doesn't stop. I wouldn't bring your kid over to visit anymore.
On another note about BIL and MIL. It could be that MIL is complaining about your kids and the BIL is trying to play "peacekeeper" by badgering your kids so that his mother would not be bothered by them. If that's the case, you may not want to be SO angry at BIL. He may actually - in his own warped and diluted way - be trying to keep the family together.