My mother has been 110 pounds all my life, which is healthy at her height of 5'2 and I'd say she set a good example in that regard. One of the things I'm most grateful for is that weight was never made into a big issue. I was never made to feel guilty for having seconds. Food was never forced on me, nor was it ever denied. I definitely do not blame my mother for my being overweight (I know I have the opposite problem as your daughter, but I think it still applies).
I would hope your daughter has (and had back then) enough common sense to know what is and is not healthy. You were showing her respect by allowing her to make her own decisions, as long as she was healthy. 97 lbs. is very tiny, but I don't know how she carries it. I'm also 5'4," but I would probably look like death at that weight.
To play devil's advocate: Anyone who's 5'4" tall and weighs less than 108 lbs. meets the physical criteria for anorexia. I don't know your daughter's eating habits. Maybe she did starve herself, but hid it well; I don't know. A parent can put (force) his/her child into medical care for anorexia until she is 18 years old.
You might want to ask if she felt she was suffering from anorexia. That seems like a good starting point for discussion (if a discussion is what you want). If she wasn't, then yes, tell her nicely what you wrote in bold letters. If she was, then maybe you can explore the issues surrounding that. I have a little experience with disordered eating, and I know it can be a very sensitive topic. If your granddaughters are dangerously underweight, itís your daughterís responsibility to determine whether or not they should speak to a physician.
"Act as if it were impossible to fail." - Dorothea Brande