I have no answers but would also love to hear other ladies' inputs. My LG (2,5 years old) is in nursery school, and there is a little boy in her class who acts in very much the same way towards her, as well as some of the other toddlers. The teacher also reprimands him, but it does not seem to make a difference. Both my husband and myself have concluded that there may be some issues at his home, or that he feels threatened for some other reason.
Last week he rode my little girl down on his little scooter bike, just as my husband arrived to pick her up, and then turned around and rode over her bag. This was not the first time we have noticed him acting like this towards her. My husband gave him a very, VERY stern talking to, in a very stern voice (the same voice he uses with our Rottweiler male when he gets out of hand

) and the little boy ran crying to the teacher. I'm not sure if his reprimand was frowned upon by the teacher or not, but she seems to have her hands full with this kid too. We haven't had any problems since.
My conclusion is, perhaps some kids are just brats (due to circumstances) and that parents should be on the lookout for hurtful behaviour, and deal with it decisively. If I notice something like this again directed at my child, I will definitely use my "Rottweiler voice" to reprimand. I am supposed to be my child's protector after all.
With in-laws it is obviously a different situation, but is it possible for you to speak very seriously to the parents about your feelings and concerns? At some point some discipline is going to be needed for their son. He is a bully!