You asked for an opinion, so I’ll give you mine. Feelings are never wrong. They are information. Acting on feelings is a choice. Confronting a 79-year-old for something she said 17 years ago is both unnecessary and hurtful. Don’t.
Her mother was being protective. It’s what mothers do. Frankly, your letter indicates that she may have sensed that something is amiss. You have held onto one comment from 17 years ago to justify trying to separate your wife from her family and friends. (You’ve also held onto a grudge about something your father said at the time. Really?) Your wife has been strong enough to refuse to let you control whether she sees people she loves and has somehow prevented you from hurting her mom. Good for her.
But not so good is that the two of you haven’t had a healthy relationship with each other or with her family — and maybe not with your own family of origin as well. Part of becoming married is for a young couple to define — together — how much contact is healthy and how to support each other in maintaining family connections. Done well, family connections only increase the love and support available to the couple. You and your wife have not done that developmental task well. That often results in a wedge that leads to divorce.
Everyone is complicated. It may be that your mother-in-law is as sweet as other people say. It may be that she doesn’t like you and doesn’t hide it. But it may be that your grudge prevents you from seeing the parts of her that are lovely.
The problem is not with your wife’s love of her family. The problem is that you are trying to control your wife’s relationships with the friends and family she loves. You are 50 years old and married 17 years. You still have the time to change your attitude and to become a welcome part of the circle of people your wife brings to your marriage. If you can’t do your own attitude transplant, do consider getting some help from a marriage counselor.
I wish you well.