I can't give you the legal definition of Larceny because it varies slightly with every state.
As for the charges being a felony, that's up to the District Attorney. It looks like he's only charging for the theft of the checks, not for writing bad checks. Did your mother-in-law file charges? Did she honor the checks? This makes a difference.
As for custody, that depends on a lot of factors. Usually, (remember the last post) one mistake will not alter a custody order but could pur restrictions on it. But the two are separate incidents and to get the charges brought up in family court is a very dangerous proposition.
Most judges see these kinds of things every day and unless it harms the child in some way, they usually don't give a damn.
But you can still bring it up in a modification of Custody hearing.