We really do not know that much about Lily's mother besides the fact that she died from eating "sour apples and milk". But that is enough information for me to make an opinion about Old Woman Magoun. We can infer that she killed Lily's mother. Some people have said that she killed Lily's mother in order to preserve Innocence, and she killed Lily to do the same. However, when the Grandma killed her daughter, her daughter had already stopped being innocent for at least more than nine months. Also, Grandma (most likely) killed her daughter AFTER Lily was born, which means she never let Lily experience a mother's love.
I am still not sure if Old Woman Magoun's action of killing Lily was justified or not, but I am sure that she was crazy. Now whether or not a crazy person can make justified and rational decisions is a whole other can of worms.