I must say I saw this thread and went straight to it..
I definitely started on bad terms with my MIl. For the simple fact thats she is reeeeaaaaaaaaally nosey, she asks the price of EVERYTHING we buy, no matter how big or small it is. Always hounding us on saving money, we need to save, save save! All things that are true, but get a grip..We are very responsible and know what we're doing. I always tried to be smart about it and bi**hed about the BIG things like someone mentioned earlier.
When we had our 2 kids...I realized everything changed. My grandmother (R.I.P) told my dad when he was little..."If you love my DD/DS then I have to love you". I worked for the first 2 years my DD was born and right after my DS was born. She never charged us a dime... she let us borrow $4,000 for our down payment for our first townhome, bought our kids bedroom furniture. I mean I can go on and on about all the gracious things she's done for my kids. Don't get me wrong, she still annoys me and still gives her freaking opinions and throws her little hints on finding out how much we paid for things.
My kids adore her....what matters here is that she is so great with them. I've noticed quite a few moms mentioned this same thing.
I think you should just be grateful MIL is so good to your child and as a kid... why not have the streamers and cake?
What part of the cake seems creepy? I had several barbie doll cakes and I love them. If it's what I'm thinking, you see the head and arms of the cake and the dress is a cake.. right?
I think you should definitely find a way to tell MIL (however makes you most comfortable) to respect your wishes in your home. Now, since she lives so many hours away... whenever DD goes over... it's none of your business if she wants to have streamers ...doll cakes... or whatever waiting for DD because that's how she decides to show love and affection to your baby. As long as it's not affecting her health..allergies..
I definitely don't think you should get drastic over it and affect the relationship over it. Kids remember all those fun things when they are small. As long as you and DH are on the same page, than that's good.