Oh biscuit how awful, I really feel for you. What a terrible thing for her to do, no wonder it's got to you so much.
And of course she's still making it "your fault", as if an innocent baby could possibly have been the cause of all her issues!
It sound like she was (and is) all twisted up with self hatred inside, couldn't live with the pain of that, and so projected it all onto you. Because she could. Because you were there. And defenceless and tiny, and obviously couldn't stop her.
I would actually question the role your grandad played in all this - her issues must have come from somewhere, and to me that would suggest that there was something amiss in the family dynamics when she was a child herself. Do you know what her relationship with her own mother was like? Did your grandad perhaps enable toxic behaviour there?
That might be a painful idea if you're close to him, but I'm just saying it to try to ease the burden of guilt you feel at your grandad being so upset now. If you can see him as someone who actually played a part in creating this dynamic rather than being a helpless victim, that could make it easier for you to feel ok about prioritising yourself and your own DC over him. And also what tribpot said, spot on.
You say you still don't know the reasons behind her behaviour; I suspect her own background would give you a lot of the reasons, and also, as with all abusers, they do it because they can. Whatever, the thing you most need to know is it's not you, it's her. Damn right she doesn't get to see your DC. She sounds like a nightmare.
Am sitting here thinking about my own nightmare mother. Also NC. It sucks, doesn't it. Thank god for having DC to love and cherish, sounds like you're a lovely mummy yourself, even though you had such a terrible role model!
Also, along the lines of what a pp said, anyone who's got an ounce of emotional intelligence will not be taken in by her version of events. I frequently read things in the papers and so on where people are justifying their emotional abuse and neglect of their DC and turning it around to put the blame on their DC, of course. I always judge the parents as the deficient ones forthwith, and feel nothing but compassion for the child/adult child of someone like that.