Hmmm... I'm on the fence.
I have absolutely no objection to my step father being a grandad to my DC, he will be a big part of their life even if I only met him as a young adult. He'll have been there for their whole lives, from day one, so I imagine they WILL see him like that and it's not for me to police that or tell them they can't.
However, I did want him to be called something different to my Dad who wanted to be grandad. Therefore we came up with another name together for him which we always called him in front of the DCs until they adopted it themselves.
I don't think I'd have really cared though if right at the outset they'd signed a card off 'grandma and grandad', it's a card at the end of the day. I'd have just had a discussion privately afterwards to say 'oh my mum is going to be nannie but how about nana, gran X or whatever'
The picture thing, I think YABU. I could understand the hurt if you think this has been put up solely to upset you but I don't think it's unreasonable for her daughter to want a picture of her parents together up in her own home. They are her parents, she is entitled to that imo.
I have pictures of my parents together, my mum who is now married to my step dad and has been for many years, even went through them with me the other week just having a laugh etc... It's really important to me that I have these pieces of my history, because even though they are no longer together, my parents marriage was part of my history, my memories, my childhood etc... It doesn't just belong to them. If me and DH ever split my DC could always talk about memories of us together or see pictures or have them up if they wanted. That's their right as our children, in my opinion.