I'm definitely not saying you didn't handle it "right"....but I wonder if DD6 could have held her own against the old bat if given the chance. Would have been nice to hear her say, "No, Grammy, YOU'RE lying. You said it and it hurt my feelings!!"
No kidding that's how kids get screwed up!! My daughter lived with her dad for 7 years and she's been in therapy ever since she left (including a 5 month residential program) because he did the same thing to her! He constantly distorted reality ("I'm not drunk!") and invalidated her feelings ("You're just being dramatic!") to the point where she couldn't trust her own mind or feelings anymore! It's been hell trying to get her well.
You did good!!!