No, you're not petty or silly. It's good of you to allow her to hold your baby at all, especially if she's a heavy smoker and not someone your baby knows well. Many babies her age would scream the place down if an unfamiliar person came too close or held them. I vividly remember my dd crying like an abandoned waif because I let my sister hold her while I was only 2 feet away.
My sister once passed her baby son to our older cousin for a cuddle, and before she knew it the cousin had passed him, without asking, to a male friend of hers. He was a compete stranger to my sister and was smoking a cigarette at the time.
Your aunt may have been trying, indirectly, to reassure you by saying your daughter didn't need a plaster. Hard to think of a clumsier way she could have gone about it.
I bit my mother's head off the other day for grabbing my dd by the arms and trying to drag her across the floor when she was going into a strop. (Dd, not my mother.) I was already on my knees talking to dd, didn't want interference and would never allow anyone to pull dd by the arms anyway. It's a strange thing to come back to Mumsnet and read recent posts about 'what do you do if you see someone mistreating a child in public?' alongside those saying 'treasure your mother while she's alive'. I'm still so cross about that incident it puts me off inviting my mother again, so no wonder you're seething about your aunt.
Still, relations and visitors come and go. You are the one who's there all the time including the tough bits. You get the best smiles, the best cuddles. No matter how insensitive people are they can't take any of that away from you.