Honey, I have a ten month old, I totally get the mamabear feelings...I understand why it bugged you...but I think you need to remember something about grandmas:
They are women, mothers, just like you. She held her baby, rocked him and hummed softly. She felt that same mama bear instinct that made her worry endlessly about your DH when he was tiny. All those special moments you love and the things about your new life as a mother that you would never trade...even on the hardest day of mothering...she had that, she has come alllll the way through that, to the other side. To watching her baby, with a baby. Think about how happy it makes you to bath your DS. Think about the fact that soon all his beautiful fat will melt away. His body will become the wiry, hard body of a little boy child and he will still be beautiful to you always...but he;ll never be a baby again...you'll never get to squish his slippery fat body in a tub again. That's sad to think about, isn't it?
Now....imagine your DS is allll grown up. The years and years have passed and he's grown into such a fine man and has a new best girl in his life...and then he marries her and they have a BABY BOY!!! "WHAT LUCK!" you would say to yourself "My baby grandson...squishy, fatty little baby, I remember how this felt...oh, this feels good!" - can you imagine. Rediscovering the joy in that experience, after losing it for so many decades? You would be in your bliss!
It's hard to remember how it feels not being around a baby, after you have your baby. But, in a whirl of years it all passes. And we look back and say "Where did it go?" - you are in your prime. This is your new budding family at it's finest...having a baby in the house is the luckiest, lovingest, cutest, most positive time in a famiy's life. Let her enjoy this time with you....I know, she sucks. She dresses him in new clothes and all of that. Just let her live this again, touching that squishy baby. And as for you....I know how absolutely awful it is to have to sit at work and miss him. But he's being loved...and it's about him. If you are at work and unavailable to enjoy yourself with him...she may as well be, right?
Let her do her thing, one day you will look at your grandkids and you will begin to relive with them those precious years from far past and you'll be so glad for your DIL, when she is kind to you and humors an old woman with a crush on her baby.