Your sister-in-law is a mean drunk and an alcoholic. She probably wouldn't say any of those things when she's sober... but she won't stop drinking,and she won't admit that she should; I'm surprised she even apologized to your father. Your brother is an enabler. He's probably thinking along these lines: "If I do this and I do that and I avoid the other thing to keep her from getting mad, it will all be all right." Of course it never does, but he probably thinks he can control the situation, and that it's all up to him.
She's using him, he's enabling her. Users and enablers tend to find each other: the person who needs someone to lean on -- without giving anything back -- and the person who thinks he _should_ be leaned on, that he should take care of everything. They've been like this since they met each other; getting your brother to attack the problem is like getting him to set a dynamite charge on the very foundation of their relationship.
This quote says a lot:
Quote:
Our parents now don't know who to believe. They don't want to be in the middle of this and don't want to hear any more about it, say it's something between the four of us and it's up to us to resolve it. They're not taking sides either way. I think that's understandable, but eventually wrong because it amounts to tiptoeing around her and the problem.
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Of course they know there's a problem. They're ducking out on the issue because they fear losing access to their grandchildren if they do something and your sister-in-law wigs out. Your brother in law is ducking out on the problem because he fears what his wife might do if he tries.
So the question is: can you help them? Can you help them if they're afraid to see that help is needed? Will you help them by carrying on the charade? (That, I know: no.)
But he is your brother. Meet him alone. Tell him how you feel. See what he says. Hopefully he'll unbend and at least talk honestly about what's going on. Offer the kind of help you're comfortable with: which, I think would involve giving him, his wife, and his kids any support needed to straighten out the situation. If he doesn't want help or want to try, your family may have to withdraw from social situations with his family.
What they say about drunks is that everybody has a bottom to hit before they straighten out; some have a fairly high bottom, some don't. As a person, your sister-in-law hasn't hit bottom yet, and her husband isn't allowing her to do so and take ultimate responsibility for her actions. As an enabler, your brother doesn't hit bottom until he realizes that all his excusing and compensating isn't going to make their life normal. And you start that by refusing to socialize. Contact, sure. Socializing, no.
Tell your parents, too. Full-family gatherings are out. Tell them there is a problem, and you believe that they know it, too. Oh, everyone will try to make you the bad guy for a while; but keep it up, and keep offering help at every instance. At some point she'll self-destruct to the point where at least your parents will come on board. And maybe then there['ll be critical mass to convince your brother.