Hey this might be a little too late for it to be seen, but just wanted to throw in my two cents, since I was the son of a family in a similar situation. My grandparents on my fathers side "excommunicated" my family before I was born, because of religious differences, but they made good before I was born. My parents have always disliked them, but they never pushed their feelings onto me as to my grandparents. And while I am not super close to them, and to be honest, I can never really "love" them as much after watching how they interact with my parents, I am so grateful that I had some type of relationship with them, even though they are incredibly toxic. Especially now, when it looks like neither of them have long left.

I'm not saying to go with their demands as to naming, and baptism, but I do think it would be nice, especially as your daughter grows older for her to have a relationship with them. As toxic as they sound, its more than likely that she will grow up with some type of reservations about them if you chose to do so. Obviously I wouldn't push it with them if they continue to push their ideals, and to say its not up to them. Just my two cents I guess.