Absolutely tell her she needs to pay for it. ALL of it.
I assume you're good friends, since you talk about wanting to get together without the kids, but the way this woman is acting is NOT the way you treat a friend. True friends would be respectful enough to stop their children from tearing apart their friend's house and belongings. They also would OFFER to replace items destroyed by their children.
The next time she steps in to laugh it off and say it's okay, I would turn to her, look her in the eyes, and say "Do you realize YOU'RE forgiving them for damaging MY home?" That's not her place. The only property she gets to say is "okay" to break is her own property.
This woman either isn't your friend, or she simply has no clue how to be a good friend. Tell her that you have to insist that she do something about her child's behavior, or you will have to find other ways to keep in contact without her coming over to your home. Get together at her house, the park, McDonalds, wherever, so you and she can chat and the kids can play.