You were due to not be at DAunts' house anyway.
You have a plan that involves your DM and DF, DMIL and DFIL, and "closer" extended family. Which was all set up in advance of the bereavement, by the sounds of things.
The family, as a whole, is having trouble coping with the bereavement anyway. So there will be fall-out regardless.
DM, whose DF has died, WANTS to go to your house.
YOU (and DH presumably), still want to host in your own house.
So you go ahead and host, let DAunt know soon that that continues to be the plan, and that you are doing it this way as this is what your DM wants and what you want.
You can let her know you will visit, on 24th, 26th or some other day that suits, or offer to host another gathering of just your DM's side of the family including DAunt and DGM, on another day, if that suits.
You can also reassure DAunt that you will be making plenty of time to remember DGF on the day, and that includes ...(stopping in Church for a prayer, calling to graveyard for a few quiet moments, adding his name to grace before meals, having a special thing to remind you of him somewhere around the house....) or whatever else you and DM feel would be a good way to mark his absence on the day.
You can also express the wish that you hope they can have a peaceful Christmas, with their own remembrances of DGF on the day, as on other days. And acknowledge that it will be very different this year in lots of ways, (so it possibly is nice, in a way, that you will be doing some things differently yourselves - but that may be a step too far for DAunt to hear).
(I possibly wouldn't mention trying to make some happiness for your younger DSiblings, even though you probably will be trying to do that, as it may be too much for DAunt to hear).
Talk to your DM first, but let DAunt know soon before she can start putting pressure on you, that you are looking forward to doing it yourself and hosting everyone, and that it will be sad but also making sure she knows that life must go on at the same time.