What to do when there is conflict with family member's children and their behavior effects your own children?

I let my mother in law's son stay over for a week to spend time with my son which is also his nephew.My son is 10 and his uncle is 13.For the most part he is a good kid but there are times where he has a big head so to speak and thinks that since his title is "uncle" that he can boss and tell my son what to do and my son has to obey.Not only that but he is a bully.That's the only way I can describe it lol.He also has alot of freedom to do an go where ever he pleases it seems at his home and I guess expects it to be the same everywhere else.Wherever we are at he likes to just take off with my son alone an they are no where to be found.He also has several pocket knives that he misuses and is NOT responsible with.For instance when playing with his other nephew he put the knife to his chest then throat but claims he was just messing around.He likes to throw the knives and let the kids watch.He cut himself pretty deep while messing with it an went to the ER.This is also a kid who constantly talks about fighting and "messing people up" and thinks he is cool because he has a knife.He encourages my son to cuss since he cusses.When he doesn't get his way he tells my son he is no longer his uncle and that they are no longer buddies until my son gives in.Then I find out during the visit he got miffed when it was my son's turn to play the video game and threw the controller on the floor calling my son a bastard.My son's father just died a few months ago too.He as yet to apologize for calling my son that because it sent my kid to his room in tears since he knows what it means.I think the kid is terrible and a bad influence and basically is telling my son that it is cool to be a bully and wanna beat peoples *** because that's all he boasts about when he is here and I catch my son trying to be like him because he thinks its cool and have explains its not "cool" and the kid is delusional. I personally don't care for him much but he is"family". I don't really care for my child to be around him but if I do that then my mother in law will be crushed because she won't have much time with her grandson an they are close too.My son says his uncle can be very stressful at times as well but he just deals with him to save the argument and is very kind/sweet and gives in most of the time or goes along with it he says.I don't know what to do other than tell her that she needs to dig into her child's *** so to speak if he wants to be around his nephew or something has to change because i don't approve of his behavior and don't want my child to pick it up or deal with him and being bullied as he calls it.I told her she is more than welcome to visit here with him or we can go do something all together since right now I do not feel comfortable with my child over there around his uncle and in her care since frankly I don't think she has a handle on her own kid and lets him do as he wishes an their is no discipline because he is very disrespectful and doesn't listen to her or anyone for that matter an thats why he is the way he is.Make sense?I dunno I am just very upset with the whole situation but am very torn on what to do other than what I suggested lol.Any advice?