She sounds a bit like my sister. My mom told me that my sister was always jealous of me, for no reason she could ever figure out. So when my sister hurts my feelings, it's because she is feeling insecure and wants me to feel lower so she can feel higher. I hope that made sense.
I have a friend who really needs to get a thicker skin. The things she's hurt by are ridiculous. She's always telling me how someone worded something the wrong way, or someone didn't say something when she thought they should have. I hurt her a few times because I was actually trying to be polite. She emailed me some photos that she took, saying how she just loved them and weren't they great? Well, they weren't. Once, I said what I loved about the photo, but suggested she needed more contrast. She flipped out. So the next time, sort of didn't say anything. You know, if you can't say anything nice, don't say anything at all? She still flipped out. "You didn't say you loved my photo. Why? Do you hate my photo? YOu're just like my mom. She can't tell me that my photos are good. I can't believe...."
You get the picture.
What your sister says isn't the same thing. She actually says something hurtful, so why should you have to shrug it off?
Without being there and hearing the tone of your sister's voice, it's hard to judge the situation. But to me, it sounds like she was just using the politically correct version of "your daughter looks retarded." Can anyone actually think that's not rude? Joking around with a friend, laughing, and elbowing them while saying, "You're so retarded!" is a totally different story. But I would never ever think to say anything like that.
When you know that someone hates something, and then they accuse you of doing or being that thing, it's hurtful. My husband doesn't understand this. He says he hates Californians. Well, I grew up in California, so I am offended by that. He doesn't understand why. So knowing that your sister doesn't approve of the spacing of your children, then she brings it up in conversation, yeah, that was meant to hurt you.
I hated psychology. I never wanted to learn anything about it. It didn't come to me intuitively. I have been in a crash-course in psychology for the past 8 years, from the school of hard knocks, and I have read some books. What your sister is doing, what my husband does, and what my sister used to do to me is MANIPULATION. They get something from putting you down, watching you squirm, or making you mad. They feel powerful when they do that. They see you as a superior, so they want to take power from you. This isn't conscious--they don't know why they act that way toward you.
It was a shock to realize that I'd been manipulated for years and years and not understood what was happening. i read this great book called, "Stop Being Manipulated" that really helped me recognize it. I don't know if it's still in print, but try reading a self-help book about it.
Good luck!