Why is it a dead end relationship?
Why is DS "chipping away at her ambition"? So far as I can tell he's excited for her. He has ambitions too. DD doesn't have any plans for Uni.
What would you expect to happen after you'd "thrown cold water" on the relationship?
Your DS isn't the boy the GF's parents want for her at this point of her life, with the end of secondary education on the horizon. Her parents do not want her to make significant life choices - job, university, to move away from home and if so where to and for what purpose - based on the relationship.
The GF's mother has noted, as you have, how serious this relationship has become and how quickly.
She has noted, as you have, that he spends much more time at her house than at home with you.
She has noted that DS's father died around the start of the relationship and she is very likely concerned that DS is leaning on her for support or using her to distract from grief.
She presumably knows her daughter well, and you don't. She has very likely seen a change in her since the relationship began, and she is concerned.
She wants to apply the brakes without having a big confrontation with her over the intensity, the frequency of visits, the sleeping over, which would drive a wedge between her daughter and herself.
She wants you to know that this relationship is too intense and moving forward at too fast a pace, and she wants her daughter out of it.
I would want my daughter out of it too, tbh.
Too much intensity too soon is rightly seen as a big red flag.
I would keep on talking to my DD about her future, her plans, what she feels life holds for her and how she's going to get it.
If I had any whiff of the words 'we' or 'us' replacing the words 'I' or 'me' I would be getting my bucket of cold water and a little spray bottle ready, and I would be planning the demise of the relationship.