Letting her see her GC in controlled circumstances is a kind thing to do, and won't make your point less strong.
You are a strong and kind woman SaveHer. I'm awestruck.
I'm with FG. Letting her see her grandchild in _controlled_ circumstances is really a good thing. My alarm bells would be immediately set off, however, if your MIL immediately starts trying to push the boundaries ("When can I babysit her again?" "Can you bring her to my house ?") Do you have a plan if she starts doing that?
And again, as FeelingGood said, she may be intimidated by her son, so she may not even want to ask these questions. All you can do is remind her she is just as free to draw up boundaries - they serve as a defensive layer of protection that will preserve her relationship with her granddaughter.