A) Bridesmaid issue: You are under no obligation to have anyone in your wedding (or at your wedding) that you do not want. You're the one throwing the party, you get to decide (nicely!). You don't necessarily have to have this woman in the wedding party, but it might be kind to give her a small role during the ceremony, as suggested. True, there might be a little drama regardless... but you can minimize it by being thoughtful, kind, and then sticking by your decision.
B) Guests: You are the one footing the bill, and therefore are the one who gets to decide who is invited. No ifs, ands or buts about it. You do not want these people at the wedding. Do not invite them. If your future MIL brings it up, a simple "I'm afraid that won't be possible" is enough. HOWEVER, your future husband MUST stick with you on this issue. He must say the same thing. Going limp about the issue IS getting in the middle of it. Staying out of it is saying "I'm afraid that won't be possible." And then politely, but firmly sticking to your decision.
Best of luck! No matter what, it's a day to celebrate your union. You'll have a great time!