Whether DD's right or wrong, her way of looking at the situation seems like it has a healthy dose of rational detachment involved. DD isn't giving passes, and she's calling it as she sees it and as it affects her. It's a great place to start healthy boundaries.

Please don't be rough on yourself if you still have a soft spot where she's concerned. This was someone you loved and took care of for many years- old habits die hard, but they will die eventually.