Help! MIL is driving me crazy... I love her dearly, really - she is a lovely lady and she means well but she just has no idea sometimes.

I'm sure there are some of you out there who have exeprienced this.

So, MIL loves to hold DS2 who is now 3 months old. Understandably. And when I go over there I am very happy for anyone to hold him, provided he is content and his needs are met (he is put to sleep when tired, etc etc). But he is now going through that phase where he is starting to distinguish Mum and Dad from 'other' very clearly and is not so happy to be away from the familiar faces and voices of his parents (understandably).
However, MIL has this annoying habit of continuing to hold DS2 (as she did with DS1) even when he cries to the point that he becomes so distressed he is literally gasping for air between sobs. Then, instead of doing what most people would do - (hand the poor bubba to its ultimate comfort - Mum), she walks off with him to the other end of the house, where I can hear him screaming his poor little terrified lungs out.

I have tried letting it go before - thinking that, surely she will give up and realise that whatever she is doing is not working, and then hand him to me.. but no, it appears that unless I go over and literally pull him out of her arms, she will continue to deprive a distressed baby of its parents and apparently she has no problem with this.
I simply cannot imagine doing this to someone else's baby - no matter how badly I want to hold it - it just defies common sense. And as a woman who has had 4 children, I would've thought she'd know better, and would remember what its like to be in my position as a mother when you hear your baby in distress.

Last week when DS2 became upset (after she'd been holding him for about 20 mins), she asked me "does he need a nappy change?" "No - he's got a fresh nappy on" (as if he would be crying uncontrollably because he's done a poo - for heavens sake, at 3 months it would just be a pleasant relief to get it out), then "does he have a dummy?" DH replies "Mum, just give him to Jel, he'll stop crying straight away if you give him to her." She hears his comment but chooses to ignore it, asking again, in an irritated tone "yes, but does he have a dummy?"
I reply "yes, but..." trailing off in disbelief, watching my baby screaming at me with pleading eyes, not bothering to explain to her that I am not really keen on using a dummy anymore now that he is able to self settle himself to sleep, and the fact that there is no way in heck that he is going to take dummy when he is screaming like that.

Last night whilst she was holding him he became upset again. He was surrounded by unfamiliar faces and voices so it was easy to see why. I was helping with dinner but as he became increasingly distressed I realised I'd have to take him and calm him down. However, MIL took the opportunity to walk off with him to the other end of the house. I tried to let it go and started chopping vegies furiously, wondering how long she'd let him scream like that. Eventually DH said to me "Jel he's not going to stop crying - you need to go and get him". In hindsight I wish I had told DH to please go and get him himself, and explain the situation to his mother, as I don't want to always feel like the woman who takes her baby off others when he gets upset- iykwim?
But instead I stormed off, glad I had held off for as long as possible but angry that I had listened to my baby scream unecessarily for so long because MIL is being selfish or maybe just plain dumb. It seems she is unwilling to accept that babies sometimes just cry because they want their Mum or Dad - if its not an issue she can't solve, she doesn't want to know about it!

Anyways, by the time I got to her my hands were shaking as poor DS was red in the face with tears streaming down his face as though he'd been adandoned forever. I pretty much grabbed him out of her reluctant hands and said with a shaky voice "when he gets distressed like that you have to give him to his Mum or Dad." It was pretty obvious in my tone that I was pi**ed off. She tried explaining that she was checking his nappy as she thought he might have a dirty nappy (he didn't), and I explained to her (as I have done numerous times with DS1) that doesn't cry like that over a pooey nappy! In fact, neither of my boys have EVER cried over a dirty nappy - they are usually happy as a pig in mud after they have relieved themselves!
So anyway, as soon as he was in my arms he started to calm down, but it took a while as he was so worked up. About 5mins later he was asleep in my arms - completely exhausted from the ordeal.

Sorry this is so long-winded, but what would you say/do in this situation? Have you ever been in my shoes?
Ahh - I feel so much better to get this off my chest. This stupid issue kept me up all night with 'I should've said/done this' etc etc.