My sister has this same problem. A little bit different though, in that she leaves her daughter with our JW mum willingly. Mum isn't a bad person but she is heavily indoctrinated and believes with all her heart that her little grand daughter needs to be taught about Jehovah.
My sister has sat mum down and been very direct about her daughter not being exposed to the JW religon. No meetings, no prayers, no bible stories book NADA! I know it got through because my mum rang me about it all upset. (sigh...) A few months later and its back to its old ways. I rocked up at my parents the other day, my neice was there carrying around a bible stories book. Mum snuck her to the meeting that weekend.
My sister is naturally very upset and angry. It was a big thing for her to approach my mum about it in the first place. I suggested that she enlist the support of her husband. If mum won't respect my sister then maybe she will respect my brother in law.
You don't want to stoop to their low standards and play the disphellowshipping game but like someone else said maybe it has to come down to supervised visits?