Yep, the curl-bashing thing is ubiquitous, at least in the US. If all those relatives told me I was “crazy” for not straightening my kid's hair, I'd tell them - even if I didn't mean it - that I don't care for their
hair, and they are crazy for not curling it. I would say it just to try and make them engage their brains.
Not sure this has happened yet, but her opinion does matter the moment your kids overhear it, or the moment those comments are aimed at them. It's abusive IMO. If it were me I'd make it plain to her that if she says anything in the presence of my kids about their natural texture being unacceptable, she will be immediately invited out of my house, or if we're somewhere else, I will take the kids and leave. She doesn't have to get your logic. If she's less married to repeating her upsetting comments than to seeing you and the kids, she'll get the point and stop. And you might even earn a little more respect by putting your foot down.