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I am concerned because of how you seem to be defining the issue. You said, "Anyway, I was more interested in feedback about how certain things (too much tv and not enough variety with playthings) can cause issues in development." I see these issues as something to take into consideration when deciding how to parent my own children -- but totally not my business when it comes to other people's children.
I think the issue that you need to be concerned about is completely different. You said, "Yet she is incredibly harsh on my kids..." and, from this statement, it sounds like she is being unkind to your children. You also said, "...she tries to make herself feel better by putting me and my children down." Being unkind to my children and putting my children and me down are totally unacceptable behaviors.
I also simply wouldn't hang out with anyone whom I didn't enjoy being with, and this relationship doesn't sound like it's any fun for you or your children. All the other stuff about her being a bad mom or being jealous of you is totally irrelevant...I think you should absolutely feel okay about letting this relationship phase out simply based on her treatment of you and your children.
Or if she's a relative and you can't phase her out, you could just see her at family get-togethers, but intervene or even leave if she starts being mean to you or your kids....and if the get-together's at your house, let her know if the way she's speaking to you or your children, or the way she's allowing her son to behave in your house, is unacceptable, and then ask them to leave if the behavior continues.
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