You so did the RIGHT thing!
Think about from this perspective (and maybe laugh a little):
You and MIL are sisters, 10 & 8. MIL did something she wasn't supposed to, she broke a house rule. Wouldn't you tell? Wouldn't the punishment be worse if you knew and didn't tell?!
Imagine the disaster on the day you would be opening gifts, DGD opens the Bratz gifts, is over the moon, DD and DSIL are irate, and there is a big blow up at Christmas.
A big blow up now is better than during the celebration!
We also have a no Bratz rule (as well as Cheetah Girls) and I expect that my parents and in-laws abide by it. Also, some toys my parents buy and I tell them that it's fine, but they toys will stay at the grandparents' house, and that's the deal, and it's fine.
My kids are 5 & 3.