I need some perspective cos I dont know if Im over reacting and getting in my own head.

My baby is 4 months old and the first grandchild for my in laws. My MIL is OBSESSED with her. They live out of town and met her for the first time a month ago. She sometimes makes up scenarios in her head that are fantasy - for e.g. she says when my baby saw her for the first time the baby looked at her as though she said "I love you". When in reality the first time my baby met her - she cried and cried and refused to go to her, as she didnt know her. Now shes warmed up and easily goes to my MIL. We kinda let her believe what she wants as this is her first grandchild and shes been super excited all through the pregnancy etc. They are visiting and going back home in a few days. She said to me that she wishes she was still breastfeeding so she could feed her. I was caught off guard as I found this odd. I know there are the existance of wet nurses if mum cant BF, but it seems like an odd thing to say if the mother is present and BF. It just seems like a bit of an intrusion of personal boundaries, even if it is just a fantasy. Now I dont feel comfortable leaving her alone with my baby, Im not sure why. But I also dont want to be a "difficult daughter in law"

What do other mums feel about this? Am I over reacting?