grana,
Yes, it sounds pretty tough. You have to figure out what your limits are and what you can handle.
I have 6 kids, 3 bio and 3 Step. My H and I have ex BPD spouses.
I was thinking that with my question if your grand kids could drive over. My DD16 has just started driving and got her first job and I never see her.

My kids are pretty independent. My 3 step sons have a BPD Bio Mom but she now live across the country and only sees the kids for "disney weekends" and some of summer break. She pretty much leaves us alone these days. I think part of it is that they are boys. I often think if they were girls life would have been a lot harder and it's pretty darn hard some days as it is.
I think people often think a move in one direction or another will end up in a "geographic cure" but if the underlying stuff is not fixed then the problems will continue.
Can you see if you have a local NAMI support group in your area for dealing with all this?
I also think seeing a therapist and working through this would be a good idea.
It seems your DIL feels threatened and working with some of these tools here and looking through the
Workshops might help make the relationship less contentious.
mamachelle