This sounds like a really tough situation. My ex-MIL was VERY much like what you're describing here. She liked to think she was in control of my children. I had to have a stern talk with her in which I set the rules, informed her that her calls with my son would be monitored at all times (and I do listen in on those phone calls) and that the calls would be limited. And yes, it was as simple as saying "this is how it's going to be. you either follow the rules or you get cut off". She didn't like it of course, proceeded to yell and swear at me. The first couple of calls with my son, I ended the call because she was speaking to him inappropriately according to the rules I had clearly spelled out for her. I reminded her of the rules and reminded her that she was being monitored and it hasn't happened since. She also used to call every day, several times a day and I ended up ducking her calls except for once or twice a month when I would let her speak (monitored) with him. She went to my ex to complain about me and he asked me if I was ducking her calls, to which I responded flat out, "Yes, I am." He had no response to that since there was nothing he could do about it. She stopped calling so much after that.
I realize there's nothing I can do about exposure to this woman when my kids are with their father, but my kids are with me the majority of the year and I control how things are handled in my house. It's very simple to block a phone number or just pick up and hang up once you know who's on the other end of the line. I also have a written list of improprieties on her part and if she ever wants to fight me in court, I will show up armed to the teeth (and yes, I threw out the restraining order threat too, but it hasn't quite come to all that yet).
The bright side is that being the primary custodial parent gives you more time to be open and honest with your kids, to show how much you love them so they will never believe the lies, thereby undoing much of the negativity encountered on the infrequent visits with the other parent. As your kids get older, they will see all their parents for who they really are, the good and the bad. My son is now 13 y/o and he's finally opening his eyes to everyone's true character. He no longer believes the lies he was told about me, though he was greatly saddened and disappointed to learn that others in his family would lie to him about such things.
I guess my advice to you is, record everything that happens, whether you write it in a notebook or record phone conversations. Monitor those phone calls that you get and don't hesitate to end the call if something you don't like is being said to your kid. It is perfectly within your legal rights to listen to your kids' phone calls and even open mail that is sent to them (once my ex-MIL realized she couldn't get away with saying things to my son on the phone, she started sending lots of mail with language I found inappropriate and was clearly against the rules I had laid out for her). It's probably a good assumption that this woman is being fed a bunch of lies about you by your ex, which only fuels the problem and makes her more aggressive.
Just remember, YOU are the mother, YOU are the one in control, YOU have the upper hand from any legal standpoint. She can't do anything to you that you don't let her get away with. So don't let her get away with it!