Well, I've read most of the responses and have a bit of a different take. First I am so sorry about what happened with the POD. How horrible.
My 4 1/2 year old gets scared very, very easily. Hearing your story would have given her nightmares for weeks. If I were in the other mother's position I, too, would have preferred my children, especially my older one, not hear what happened. If I could have I'd have taken them somewhere else, but if they were right in the middle of their meal and it would have been tough to interrupt that, it'd be a very uncomfortable situation, to say the least.
Having said that, I don't think it's OK that she asked you to stop talking and then went on about how her kids don't watch the news. That does seem rude, but maybe she had no idea how to handle the situation. How would it have felt if she been incredibly apologetic, explained that he children get upset easily, and asked you to hold off a few minutes until they could go somewhere else?