Looking for advice on how to handle mother in law with COD?

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Here is the what happened. To make a long story short -- my mother in law is compulsive obsessive disorder personality. Her house is spotless and that's all she does is clean. She has a house full of people and she does it all. No one can do anything as good as her -- she is perfect. The problem is she likes to gossip and talk about her grown children. She spies on them if they aren't doing what she wants. She goes around and talks to the neighbors about her grown children. My wife can't talk to any of her siblings without her mother asking her what did she say? My wife just goes around her because it is none of her business what my wifes family says. Now here is the problem my wife had called her mom to talk to her because our contract was up on the phone and we were going to import her number to another phone. Her sister answers the phone and my wife starts talking to her and tells her that she doesn't believe everything her mother says and that she takes what she says with a grain of salt. Well this somehow ended up getting back to her mother who thought my wife had betrayed her trust by telling her sister what her mother had been telling my wife. This is funny because my wife is real careful and does not say anything about anyone. Her mother in law uses her as a sounding board and constantly complains about every adult child she has. She butts into everyones business. She left us 15 phone messages all on impulse telling us it's over and she's had it and yelling and screaming and I told my wife that she is so impulsive watch her do a drive by tomorrow. Guess what she did. I was ready my wife wasn't even dressed yet and we had a great yelling match. I am the type of person that does not back down. Once my wife had a chance to explain her side of the story it didn't matter with the mother in law who is perfect and can never be wrong. We had a letter in the mail the next day -- saying blah blah blah impulsive wouldn't you say? When it came to fire wood that we needed as a Christmas present she said she would get for us -- my wife knew if she didn't get it that day then we would never get it and she was right. So what should we do. I want to write her a letter telling her diagnosis in the DSMR-IV as being compulsive Obsessive disorder personality and they are the hardest to treat -- because we aren't like her we're the one with the problem. We don't devote our entire live to a sterile environment -- it's not healthy. Or should we just let it go and move on. I think that would be the best thing to do. Her older brother has already disowned his family and hasn't talked to any of them in over ten years (I wonder why)? My wife knows why but she's not telling. It's not her place to say. It should come from the horses mouth. So this women really did scare me. Why did she have to leave negative messages on our machine. Why involve the whole family when my wife did not violate any trust because she did not say a word about her mother spying on her sister and how she called my wife and asked her to make some phone calls so she could hear who would answer the phone. The whole thing is odd. My wife loves her mother but sometimes you have to cut the ties and this maybe that time. Any ideas as to what we can do for closure?