Hey Ryan,
Seems like you're between a rock and a hard place. On the one hand you want to do the right thing with the grandparents (your in-laws) and on the other hand they are going to want to indoctrinate your child so that he eventually wants little to do with you unless you follow him into the religion
I can totally understand you not being too happy about having your personal life plastered all over a public webspace. I don't think bad of you in the slightest. Please believe me when I suggest that I have your best interests at heart and say that it would be all too easy for you to underestimate the significance of what unbeliever feels about this "religion". It has destroyed thousands of families, and she is only exerting her maternal instincts by attempting to keep your son away from the Kingdom Hall and anything else JW-oriented. She knows what damage it can do from firsthand experience.
I agree with you that cutting off all contact is an excessive reaction. Even worse are the suggestions that some kind of legal action should be taken at this point. That having been said, you would do well to keep your wits about you. It often starts with some "harmless" literature, like the kiddies "My Book of Bible Stories", and moves on to more overt attempts to convert. I fear for your family, should that ever happen!
On another note you might find it fascinating to read more here, to understand where she is coming from and some of the subconscious issues that she may be continually facing. Some of it is completely off the wall, some of it is bitter, but nigh on all of it is raw and genuine.
Hope things work out for y'all, buddy.
Ross.