Mother does not want adult children to see their father because he cheated?

Need an opinion of a relative that is directly affecting my family. Husband's mother does not want us near his father or step-mother. Father cheated on her with stepmom. They married shortly before us and we honored her wishes to only invite him to our wedding. (We were pinned in a corner) Now two years later, my mother-in-law's only comment to her kids (ages 20 & 25) is that they should only see him if he "has his hand in his pocket". In other words only if he gives them money and things that she cannot give. I am letting my husband work it out but it bothers me and would like to know what other people think of this. Also, she has let us know that she will never be in the same room with any of father's side of the family. How do adult children handle their divorced parents when one parent has specific rules?