I am concerned for the three year old. He is probably already damaged from the behaviours of his mother. The problem with reporting to child protective services is that people are reluctant to do so. If she is indeed involved with drugs, and acting out in the ways you have described, who knows what the little child has endured or witnessed.
It doesn't sound like your husband is able, or willing, to take action. I agree that stepping into this hornet's nest is not a good position for you to be in, however, if it were me, out of concern for the child, I would report her to CPS.
I'm a teacher and a grandparent of small twin boys. If I thought anything like you've described was happening to those boys, I'd act as soon as possible.
Patty