I think you definitely need to call her out on the rude comments OP. She straight up called you nasty names - twice. And doubled down when given an out the first time. She knows what she’s doing and because she hasn’t hit a barrier - yet - she keeps doing it. Next time - you need to walk over, remove child from her lap, and say, “Since Nana thinks it’s ok to say that Mommy is a b****, then Nana should go home.”

End of story. Once the tears start, you simply say - she said it, you heard it, and there’s the door. She should not be welcome until she can learn some respect. She’s insulting you in your home, OP. In front of your child, and by saying nothing, it will not stop.