What do i do with my boyfriends rude ex wife of 12 years?

I am dating a man who is 13 years older than I am. We get along great have a lot in common and enjoy the same things. He has 2 children from a previous marriage a boy 14 and a girl 18. For the most part we all get along very well. There is the occasional hiccup as with any teenagers in the house but nothing out of the usual. Since I began dating this man his ex wife of 12 years has been awful to her children. They warned me she would be pretty bad she gets that way when their dad dates. I have yet to actually meet the women. I had my first close encounter with her recently during prom where she refused to buy her daughter a prom dress but when her daughter then wanted to get ready at her dads house she also threw a fit. She refused to have her daughters senior pictures taken and since I dabble in photography I took them for her free of charge and offered her to order pictures as well. She now holds that against her daughter and is constantly guilt tripping her about how she had no say in her dress or pictures for her senior year. She has now called me everything from a gold digger to a princess and has even said she “hopes I get pregnant so I will take all of her ex-husband’s money” apparently to her children as they were kind enough to pass that along. Right now I constantly tell them all they need to treat her nicely and try to work with her on things. Being rude and returning the favors she is sending will only make things worse. At this point I have not spoken with her even while standing right next to each other. I was terrified she was going to start a scene in front of many people. I don’t know if I am handling this the correct way though. Do I continue to simply ignore her or try to have a conversation and understanding between us?