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There was a blow out at Thanksgiving with my b attacking both myself and my husband as bad and lazy parents in part because we didn't force our 4 year old son to her their 2 year old daughter. I believe in body autonomy and if my son doesn't feel like hugging anyone that's fine.
My Mil and fil did nothing to help. My Bil yelled at my husband and at me in front of out two children. This is the second time my Bil has yelled out of control in from of my children.

My issue now is with my Mil and fil. All they've done is make excuses for my Bil and have made it clear that they think we should have forced my son to hug his cousin. On the last Friday of each month our daycare is closed and my Mil usually takes out one year old. Since this incident and her belief that body autonomy is basically an excuse to let our son "act like a baby" I'm not comfortable with letting my children with her without supervision. (One of only many issues, but at present my most pressing)

I'm taking some space and haven't interacted with any of them since the day after the incident where no one asked how we were doing or feeling, they simply made excuses for my Bil and clearly did not care about us, only that everything went back to how it was. I'm still pissed.

I have one week to figure out if I let my son spend the day there or if I take a day off of work and face my Mills displeasure.

Am I overreacting? Should I just let my kids go?

I don't think your over reacting at all.  I avoid having any relationship or children as I lived in fear of my mother's unpredictable behavior.

Your the parent of your child, you make the rules for how you want your life to be and if others can't respect that you are better off without them.

If you want happiness in your life spend most of your time with happy, strong, solid people.

if you want sadness or to be disturbed all the time spend your time around people with mental illness.

Leaving your family does not make you a bad person, just the opposite.

It makes you a great person for stopping the cycle of illness.

It has to start somewhere, and no one says it is going to be easy to be that person who decides to change their family tree.

The outburst in front of children is not right. 

I'm mostly on board with the body autonomy. A 4 year old is,  well,  a 4 year old.  We know our children well, yet what ultimately is going through their heads?

I've encouraged the kids in the past to hug their grandma goodbye,  but I never forced it.  That being said,  they are likely angry at you now and might force S4 to do something that makes him uncomfortable, taking it out on him.  I'd be on the fence about this. 

That being said,  it doesn't sound like your son is in danger.  Still, the yelling is uncalled for.  It would have been better to take this up privately with you.