Frankly a bit of an overreaction, IMO. She could have heard that anywhere, and may not fully understand that it’s not the Done Thing to say (or write) that about Granny.
At only 4 dd1 (now mid 40s) said - re a young cousin she’d had a mild falling-out with - and in front of the cousin’s extremely Proper mother and grandmother (dh’s side of the family, not mine!) ‘Anyway, John’s a stupid fxxxing boy.’
The atmosphere plummeted instantly to sub-zero! We were living in the Middle East at the time (home on leave) and dd1 went to school on a school bus - along with a lot of older children, including much older boys. She certainly hadn’t heard that word at home - we tried in vain to explain where she must have heard it - evidently to no avail - my name and dh’s were mud in that quarter for ages!
For ourselves, we would just have explained firmly that it was not a word to use, very rude, and privately laughed it off.
I might add that I make fairy cakes now and then with little Gdcs and certainly wouldn’t make an issue of the colour of the icing. If they want garish pink or dinosaur green, so be it.