You know, that (the red highlighted above) would be a truly reasonable reason not to trust her with your children. It may be old age / dementia or just mean, but can you really trust her not to harm your kids? (She obviously doesn't adore them, and she is very capable of hurting you, when you frustrate her.)
Imo...Fwiw, I wouldn't trust her around the kids until I was up and around after the new little one arrives; a number of the elderly can be harmful to themselves and others,