I'm sorry but I think you are being a bit u actually.
It's up to her (the mum), even at 3 weeks. The baby isn't family property, whatever family might like to think. And the baby isn't there for other people's entertainment. Perhaps she had a difficult labour; perhaps she is very anxious, very tired, in pain, shocked, not coping, or all of the above. Perhaps she is overwhelmed by her husband's family all insisting on having a piece of her and the baby and having to be on show to a constant stream of visitors. Perhaps her experience is the baby gets unsettled - and indeed you are 'a stranger' to the baby however upsetting it sounds to you.
I don't think it is rude of her, I think she is just showing her vulnerability, which as new mothers - first time? - we are all allowed to do.