I think there's an automatic assumption that any response to an engagement other than "congratulations" is rude. I don't agree with that. I think if you have misgivings you are honour-bound to your loved one to raise the issue before the wedding and make them think about it. Gma was not polite to raise this in front of the future in laws but perhaps she didn't want to do it on the phone + the LW says she only visits once a year. Plus LW brought it up, not Gma.
I too suspect more went on during the visit which isn't included in the story...
From what I've heard from other posters on this board about weird family reactions, I'm not sure that there is any significant backstory here. At least, in the opening post, there's no mention of GM saying, "I think you're making a mistake because of X (character of betrothed, financial situation, educational situation, etc.)" She simply said that she disapproved "... but I guess I can't stop you". If someone's going to tell me my proposed action is a mistake, I would appreciate being told in what manner so I could consider it rationally, rather than simply being left to assume that the other person knows better than I do.
Certainly if you have nothing constructive to say, "congratulations" would be more appropriate. And, at least, one should then not be surprised if the rest of the visit didn't go in a relaxed, friendly manner. Such a statement is not something that people easily forget, and for that reason should only be used when there is a genuine and serious reason, not just "oh, I suppose you'll be like Cousin Samantha, who got married and then dropped out of school and had triplets within the first year."