Uggg. Bragging is such a difficult thing to live with.
I do think that the "nod and smile" is the best means of dealing with it- and offering support and praise over the high needs kiddo, but you might try to use the bean dip method too- after a while of bragging. "Wow, I'm so happy the kids are doing so well. Would you like some tea?" and keep offering something to change the atmosphere in the room. I've had to let a person in my life just ramble on and on and then finally say "I'm so happy things are going well! Enough about all the kids- did you see that there is a concert in the park this week? Are you going?" and just change it yourself.
I have a SIL and Brother that I don't talk to. Anyway- When I moved into the area SIL was over and I said "Just so we are clear I am not into comparing kids. I don't like that, and I won't do that. All kids are different and special. So, please no comparing." She said of course not. Because "All kids are great, but mine are the greatest ever." or "I'm not comparing, because there is no comparing to DD" and they were serious! Yeah, that really set the tone for our relationship. After I wrote them out of my life permanetly (long story) I found out from dear friends that SIL and BRO are still bragging to anyone. They told life long friends that "DD is the smartest kid I've ever known. Smartest in her class, smartest in the grade.She's so super smart.Her teacher thinks she is the smartest PRESCHOOLER she's ever had" And dear friends were really hurt by this, they had kids the same age as well. Dear Friend ended up just leaving the room. It breaks my heart, because they hurt other people, but also because they have 2 kids, and their DD1 can do no wrong, and DD2 is a pain in the a**
I know that there is a time and place for bragging. I hope that OP makes special time to ASK about the kids and their lives. Then try to move on with the conversation. If you can't think "I'm a DUCK, I'm a DUCK. All of this rolls right off my back. I'm a DUCK." lol- it's what saved my sanity with MY SIL and BRO.