I don't particularly get on with my MIL, but she has seen my DD weekly since she was 4months old. And from around 9months of age has spent the time with her 1 on 1.
Your MIL lives abroad, so understandably wants to spend some time with her GD when she is over in the UK.
As long as your DD is comfortable with your MIL when you take her to see her next week, then I dont see why she shouldn't, in future, be allowed to spend time with her granddaughter on her own. As you say, your DD spends all her time with you, so no doubt when you go and see MIL, your DD always looks to you, so your MIL is probably feeling a bit redundant.
Re the feeding food you dont approve of, is it really the end of the world? As your MIL isn't involved in your DDs day to day upbringing, shouldn't she be allowed to spoil her GD a bit?
I can imagine how hard this is for you, and please don't think I don't understand, but you have to ask yourself, are any of these points with your MIL really worth falling out with your DH over? He wants what's best for you and his DD, but your MIL is also his DM. He feels about her, as you do about your DD.
My MIL is the only thing my DH and I argue about. She is just as you describe your MIL - overbearing, spoilt, etc etc but she loves my DD, and they have a brilliant relationship. As mad as she drives me, I know she is just desperate for a close relationship with her GD so sometimes behaves in an unbecoming manner. As mummy to my DD, at the end of the day, I know I am top dog.
Please make up with your DH. Apologise, kiss and make it all better. Remember you are his and your DD's number 1, and no one can change that.