Oh dear god, I grew up in this family. Sure, I took the teasing on the chin when I was a kid and had no choice, and when I got the chance I ran far away and never moved back. For years I would visit a couple times a year and spend the week before and the week after physically ill over the stress it created. In my '30’s I said fuck that and now live 1500 miles away and only communicate with one sister who feels the same way I do but was guilted into staying and always helping out the others. I was in my 40’s before I finally got over the damage most of the mind games and “teasing” wounds that they worked into my childhood brain.
My advice is take your child and move a few states away. Be prepared to spend a lot of time repairing damage done when she goes to visit “daddy’s family”. And never, ever join in on this kind of shit. I’ve seen the damage and misery passed on to my sibs and their kids who didn’t leave the nest far enough behind. I am so sorry for the kids who have to pretend not to be hurt by all this, and the kids they will have one day who will have it visited upon them. They will be hurt, angry people who take their frustrations out on everyone around them. And no, saysing “ha-ha, what’s wrong, can’t take a joke” is just passive agressive bullshit, trying to avoid the consequences of their actions.
So, that’s my advice based on my own experience. I’m sure it isn’t exactly the same situation as yours but so much of what you described was like you saw my family all together in action; frankly, it deeply creeped me out. Good luck to you, whatever you decide to do.