You did a good thing in helping this lady get caught up on her mortgage. She, in turn, showed you how much she valued your assistance. She is a user and manipulator. Her daughter is likely so brainwashed by her mother's guilt-trips all her life that she feels she can't escape the emotional abuse and blackmail.
Take the high road. Revenge only puts you on the same level as the person you want to get even with. Tell your MIL that you and your wife are moving into your own place ASAP, and that you cannot help her financially any longer. She will have to deal with the consequences of her choices from now on, even if that means losing her house and ending up in a shelter. Do NOT, under any circumstances, allow her to move in with you and your wife if she loses her house.
In the long run, taking the high road will keep your wife's respect, and will allow you to live your life without regrets. If you have children together someday, do you want their grandmother telling them stories about how you got revenge on her? Do you want your wife to be afraid to upset you, thinking that the payback will be hell? It's not worth it. Really.