I will say this about it. Prudie has the theological point correct. Christians pretty much recognize Christian baptism, no matter what denomination the church who preforms the baptism happens to be. There are exceptions. But mostly. Likewise baptisms done by lay people in cases of emergency are acceptable, but not the general order of the day. And they are certainly not encouraged by most denominations outside of life and death situations.
I'll also say this. It's probably one of the top ten theological points most people get wrong. I would probably cut Grandma some slack on this one. Unless she's shown some other disrespectful tendencies, I think keeping her from her grandson is over reacting. My first reaction would be to pull her in with her pastor, or bishop, and have a sit down. She's obviously not clear on her own religious practices. Which is the first thing her pastor should be worried about. Plus, once the pastor impresses on her how out of line she was, one would hope she wouldn't be repeating this again with her grandson against his parents wishes.
But seriously, does it really matter? Baptism is not magic. It doesn't make you a Christian if you don't receive the education to go with it. Which a child in Jewish home would not be getting. It certainly is hurtful that Grandma doesn't respect the beliefs of her son and his wife. But that doesn't make her automatically a disrespectful grandparent. She could just be a grandparent with a blind spot.