It is normal for a mother (or father) to spend time with their children when grandkids are born. Your SD is probably, sore, exhausted and overwhelmed. I know I was as a new mother. I know my mom was a godsend with both of my children being born. I mean, mom's pamper you. She helped me make food, she filled up my freezer with casseroles so when she left I didn't have to do too much for a couple of week (I was recovering for C-sections both times and my exH was deployed and I was on the west coast and she is on the east coast). She held the baby so I could do little things like shower. 

You and your wife share the responsiblity of your special needs child. Right now, she is counting on you do the the heavy lifting there so that she can do the heavy lifting with her daughter. Be supportive of this for a couple of weeks. This is normal. 

Tough situation. I feel for you.

What about a day program for your daughter, as Futuro mentioned?

I don't suggest that to let your wife off the hook or give in to SD's demands, but as a practical measure to give you the break you need without having to fight for it. It may also be good for your daughter to be around other caregivers -- as you said, eventually you can't be there for her. She might land in institutional care and it would be an easier transition for her if she was acclimated to meeting new people and socialized outside your home sooner than later.

A friend's daughter had similiar health problems as your daughter. As that friend and her husband grew older, they felt they needed to set up their daughter for life without them. They transitioned her to a group home while they were still young enough to keep an eye on the staff and their daughter's progress there.

Their daughter LOVED the group home setting and flourished. They still brought her home regularly for holidays and visits, but the daughter saw the group home as "her place" and enjoyed returning at the end of visits.

Several years later, my friend became suddenly ill and was dead within months. Her husband was of an older generation and has had trouble coping with day to day tasks without his wife. But at least he doesn't have to handle his daughter on his own, make huge decisions about her living situation, nor worry about her future when he dies. I think it was easier for my friend to die knowing her daughter was in her "forever" home and doing well.

Someday you'll likely have to make these changes for your daughter's future anyway. You need some help now. So see what you can find and cut your wife out of the mix for now.

When you have a little breather, you can deal with your wife's priorities. But right now you need some help. Fighting with your wife is just sucking up precious resources and she clearly isn't going to give in easily.

If you're in the U.S., you might start with a phone call to your local ARC to see what resources they offer. Good luck -- this must be so hard for you.