We develop a compact in situ Mueller-matrix polarimetry (MMP) based on binary polarization rotators for on-machine optical processing measurements. The presented in situ MMP could measure the polarization properties of free-space reflective samples by analyzing Muller matrices of samples. We design a compact polarization analysis probe that contains binary magneto-optic (MO) polarization rotators based on polarization state generator (PSG) and polarization state analyzer (PSA) pair with free-space optics components, which is very suitable for in situ measurements of optical machining. In the experiments, measured phase retardations of the commercial liquid crystal retarder by the presented MMP agree well with the manufacturer's test data. The standard deviation of repeat experimental results is 0.000227 rad corresponding to the birefringent optical path difference of 0.0560 nm. We measure two-dimensional (2D) maps of phase retardation, degree of polarization (DOP) and polarization dependent loss (PDL) of different materials. Especially, this MMP can detect the residual stress on normal glass and the compressive stress on tempered glass, which is very helpful for optical machining. This MMP can also effectively detect the external force induced birefringence on the transparent plastic sheet and the thermal stress induced tiny birefringence on the slide glass.