No, not incest, though plenty to debate nonetheless.
She has used a surrogate (contentious issue) to create a child using a donor egg (less contentious issue) and the previously frozen sperm of her deceased son (very contentious issue).
She has created her own grandchild (holy moly what the actual fuck contentious issue) who she plans to raise herself (contentious issue).
Anyone with frozen eggs, frozen sperm, or frozen embryos, be very sure that you have clear enforceable legal instructions for what happens upon your death - else your parents might be merrily creating grandchildren for themselves long after you've gone!