How do you handle a MIL like this one? Mine was sooo cheap!!!?

WOW. That seriously is the last time i would dine out with these people for a very long time. That kind of behavior is unacceptable and embaring. I would have apologized to the waitress and tiped extra. If you HAVE to go out with these people again, I would embar the MIL. Before she even orders, I would state loud and clear to the waitress in front of the table, "My MIL is very difficult and I apologize in advance for any trouble."