SCG - Here are my suggestions:
First, go over a tell her you have thought about it and keeping her kids is a definite possibility, but you have some things to work out first. Ask the children's full names and how they are spelled. Also the time they were born and their astrological signs.
Start a collection of skulls, you like skulls, right? Display them in the windows that face her house and put some of the nicer ones on poles on her side of the property or where they can be seen when she passes your driveway.
Next, talk about the phases of the moon, a lot, and stare at the kids whenever they are in sight, don't talk to them, just stare with an ever so slight smile. Get really excited when the full moon is coming up in a day or two, and ask if she needs you to watch them that night.....say, around midnight? Invite her and the kids to "join the fun" next time you process a bird. If they actually come over, collect the blood in canning jars and set them lovingly to the side, while looking at them sideways and smiling really big. You can sew little black bags with drawstrings, to put them in, for a touch of elegance. You could also sew yourself a "house coat" with a hood and a cord to tie in the front, in either white, black, or red. Light candles and arrange them in a circle at night, somewhere where she will see them. Make some torches out of tree limbs and old rags. Walk your property carrying the lighted torches and laugh hysterically at night.
Just kidding, no, it is way out of line for her to ask that of you, and you may be right, she may just be a bit panic stricken (I hope that is the explanation for her overstepping boundaries.) Wait until it comes up again, or at least until she is starting to balloon. It's okay to laugh and say, "Oh, no-no-no, if I had wanted to look after kids, I'd have had some of my own. I'm sticking to animals, if they tick me off, I can kill and eat them, and I won't go to jail!"