I understand how you feel and it's entirely up to you as the parent.
I was never allowed to be grandmother to my stepdaughter's child. I'd been married to my husband for 6 yrs when the child was born. In our case, both the child's grandmothers were very much alive. My husband was the child's only living grandfather.
My husband found out after the fact that all of his ex's partners had been allowed to be grandad. He found that quite hurtful, since his suggestion that I be an 'honorary aunty' was knocked back. (No, I wasn't the OW - the ex had acquired an affair partner at work, but I'm fairly certain that she span another tale.) I was always just called by my name.
So far as I can see, you're being entirely equitable.
I was taken aback when the grandchild's first step-grandad died...my stepdaughter's partner had the audacity to complain to me that the deceased should have left some money to the grandchild, since they "called [Name] 'Grandad'". I remember thinking "Oh well...you'll not be expecting me to leave them anything, will you?"
In your case, you're treating everyone the same. However, don't be surprised if the wee one is affected by what others say - I'm 99 per cent certain that it was my husband's ex who kept referring to her partners as '"Grandad" and the wee one just naturally copied what was heard.
As I said, it's your choice and I quite understand how you feel