I think that one thing you could try and do is whenever possible, without bringing attention to it, you should take photos on your phone with the comments too. If you can get quite a bit of a collection over a set time, you then have some clear evidence that it is not a one off, that she is doing it deliberately and if later you need evidence with your own daughters or for any social workers or anything. So then your daughter cannot deny her behaviour, and you have clear evidence for anyone you need it for. Then when you quietly state that is enough and walk out, she will see you will stand no more.
Before you do that, you need to think what you might feel able to do for your grandchildren. You might think you could have an afternoon or morning each week, or be available a couple of hours a week when they know you are there for them. So you are making a clear distinction between your attitude to her and the attitude to the children.
If you can be strong and keep to your plan, she is very likely to get into a situation which will then be obvious to other people, as you will not be covering up her behaviour or style of running her household. Then however she wants to take it, if you are no longer around, she cannot possibly blame you for whatever happens in her household. Being a safe haven and a constant support for the children would , I suggest, be the best long term thing you can do, as they will at least be able to see how a normal and straightforward life can be. The very best of luck, dont feel guilty at all, as the most important thing is that you need to be there for the children when you are needed. If you let her drag you down I think you could end up ill and then unable to be there when you surely will be needed. The best of luck and the grandchildren are lucky to have a caring granny looking out for them.