I would be freaking out as well. A stranger alone with your kid is 100% not ok. I'm so sorry this happened. I am getting anxious just thinking about it.
But, I can't help wondering what your MIL was thinking that got her to a place that she made this decision. Do you think she was overwhelmed? Maybe she took on too much.
Nothing makes it right, but if I have learned anything from this past year of huddling inside with our kids, it is thank goodness for grandparents. I wonder how you can find a way forward that works for everyone? Your LO needs time with his/her grandparents. You need a break from time to time. What would work for your MIL? Do you need a 24-hr limit for babysitting or should activities/playdates be planned for grandparent weekends? How many visits with new BF would make you feel comfortable or is that 100% off-limits? When things die down, you need convo about boundaries. Start with gratitude for her eagerness to help...then work on some of the tougher issues.
To be clear, I say all this and my MIL just took my 2 year old for breakfast ice cream soooo I get it...it is complicated!