W/ the dog thing, bummer, but you've got a plan. (Chihuahuas can be pretty fierce in terms of personality, so she could be right on that count.)
I think your mom just got a bee in her bonnet w/ the shorts thing. She doesn't see your children as true individuals; they are "my teenage grandkids," and someone in her circle has teenage grandkids that wore SHORTS TO CHURCH!! GASP!! And she can't differentiate between THOSE SHORTS-WEARING KIDS! and her own grandkids.
My response would have probably been to laugh--one of those nose-centered snorts that's sort of embarrassing and hard to stop (and they hurt!).
And then to say, "Oka-a-ay? I can promise you on their behalf; they'll dress nicely. Next?"
W/ the cookies, I'm a firm believer that traditions like this aren't really dictated.
Grandma may say she wants Santa cookies to happen differently, but my question would be: what do all the *kids* think?
It's their tradition, actually. And I know that I'd be unhappy at having it changed, were I a -kid- in that extended family.
So, my vote is to contact the other moms in the family and ask them to sound out the kids. And then you three decide what to do, and Sis-in-law T. can get back to Grandma and say, "We polled the children, and they really want to do X, so I hope you can accommodate that. Gotta go!"
(I do think you should seriously consider that one thing could be that one of the sis-in-laws feels a little shut out of holiday traditions related to the cookies, etc., etc. So be open to that, and see if you can tease it out. Me, I'd just say, "It occurred to me, maybe we should tweak that so it feels more involving of everyone. Maybe I'm monopolizing things. How can we make you be move involved here, instead of me hogging the limelight?")
Heck, OP, if I were *you* I wouldn't want to give up the making of the cookies w/ my nieces and nephews. It would be really, really fun for me, to have that time and that project with them. (As a niece, it would be important to me to have that be my aunt's project, too.)
Making them and bringing them would not be the point. The point isn't to -have- the cookies; it's to -make- them. Together.