So, you are , in effect, going to tell her that you think she's gonna molest your children? That will accomplish *what*, exactly?
If she doesn't see you and yours very often and doesn't spend any time to speak of with you, then she poses no threat to you or your children. The relatives that screw things up serve as good opportunities to model functional adult behavior for children. You get the chance to describe a bad example, then discuss the ramifications of the situation, then possible responses, then explain why you take the course of action you do. It's an opportunity to show children how to be good adults.
I just don't see shunning a relative who doesn't present a threat to you as being very functional. There's no reason to get involved in her life to help her, if you're not moved to do so. I fail to see any good reason to make major adjustments in what you do (leave family functions because she's there? Really?). I'd say that's paranoid.
However, to answer your question directly, unless you're honestly wanting a dialogue on the matter, don't bother her with it. She has enough to concern her without any unnecessary drama being tossed on the pile.
When speaking of various forms of non-monogamy...it ain't poly if you're just fucking around.
While polyamory, open relationships, and swinging are all distinctly different approaches to non-monogamy, they are not mutually exlusive. Folks can, and some do, engage in more than one of them at a time--and it's all good.