Am I overreacting, mother-in-law dilemma?

Absolutley! Your concerned for a reason! I dont think your over reacting at all! If i was you i would stop even disgusing it with your husband! Go directly to his mother and tell her nicely but stern enough to where you get your point across that its NOT ok for her to be going ANYWHERE by herself!people are getting crazier and crazier its not like it was 10 years ago! And honestly if she dosent like what you tell her thats too bad! She is your child and its your job to protect her! :) Good Luck!