That sounds horrible. I am still trying to figure out how to deal with the aftermath of the party. As far as not telling them about the birth of the 2nd child I would react differently. If it was me I would still send them some sort of message that the little guy was born. If they choose to respond..well that's their problem. At least you told them yourself and they didn't have to find out through someone else.
My Mom had issues with her inlaws (my grandparents). There were even a number of years when I was very small when I didn't see them a whole lot. It happens. I wish I got along better with them. I think what I hate the most is that my inlaws do not just say their peace. They are as nice as pie to your face and then the knives get thrown in your back. And when you confront them on it, well you misunderstood or you over reacted, etc, etc. I would give my eye tooth if they would just say their peace and be done with it. I would sooner know where I stand than the two faced business. I don't care if people hate me or love me. Just be honest with me. I respect that more.
I could give you tons of stories but frankly there isn't enough room and I don't want to ramble. I want my DH to stand up to them more.
I think you are right to give yourselves distance from the situation. And I will pass on some advice that a dear friend gave me. If all else fails and you can't reconcile the situation just remember that you have your parents who want to have a relationship with you, your DH and your child(ren). And if they are terrific (and I know they are) then that makes up for it. My parents are terrific. They love my son to death and he quite clearly has them soundly wrapped around his little finger. They live wih us and I do believe we are truly blessed to have that experience. I know what it is like to have a grandparent that doesn't treat you nicely. But my Mom's mum lived with us and I adored her. So I didn't pay any mind to the fact that I had one grandparent who, lets face it, wasn't the nicest person on the planet. Don't ask. My son has the benefit of that now as well.
I try and keep things civil for my son's sake. It isn't his fault that we all don't get along like peas and carrots. When he is older, it will be his decision what kind of relationship he has with them, if any. But that will be his choice. Just like I had the same choice given to me. When I was older I eventually understood the issues my Mom had with my grandmother. My Mom would always say "ok, now go give Grandma a hug and kiss." I dutifully went along until I was about 8ish. Then one day I said 'mom I don't want to.' and she never made me. She always said, that was the day I made my choice. But looking back on all of it, I don't think I would have understood if my parents stayed away completely. But in your situation, if they choose to have nothing to do with you, that is their loss. And a decision that they will have to live with the rest of their lives. One day, that is a decision they may come to regret.
Chin up. Have faith things will rectify themselves one way or another.