Okay...I'm a little skeptical about this and the timing of it. It's ironic that she "so graciously" extends this offer when you are in disputes with her son about child support. Coincidence? I don't think so. Manipulation...yeah...that's more likely. This, if it is indeed a tactic, does seem vaguely familiar to how she has dealt with things in the past.
I would, just as graciously, tell her that "Athough the sentiment is greatly appreciated and unexpected I do like to pay my debts in full. Accepting such a gift goes against the grain of who I am. Please continue to accept payment for the loan and if you choose you can buy J a gift for his birthday or put it into J's account for his future. Thank you for the very kind gesture."
This way, if she is using a tactic, you just showed her that people who owe money should be responsible for paying it - - like her son should. And it gives her that virtual slap on the hand to stay out of it.
If there are no ulterior motives then nothing changes and you still pay her back.
Just my opinion but you know how I feel about that lady Corine....