machelle,
First of all I am so sorry you have lived through this all these years. It may have helped if your parents had backed you and not given in to her but their mistake was thinking they were her parents and not you. They did what often happens in a divorce, the non-custodial parent will attempt to buy the child's love and loyalty and it works for some.
My ex tried it with my children but he did not have the staying power to hang around and continue his behavior so my hubby, their stepfather, is the one they call Dad.
Some day your daughter will realize that she has made a mistake, especially when she is a Mother. For now, you must believe that you did your best, you are a good Mother and no, do not feel guilty for wanting to let go and let her move in with your Grandparents. I truly know how hurt you are by all this but please remember that you are more than just a Mother, you are a wonderful, caring human who deserves love and respect.
Gentle hugs to you my dear friend.
Kitt