Only thing to do with a family member is try to love them, and let them know it. You might explain that you don’t want your children exposed to homosexuality, and ask her to respect that. If she can’t, it might be time to part ways. Your responsibility is towards your children first.
Bingo! You can spend so much time bending over backwards not to offend the homosexual relative, that you can forget what example you are setting for your own children. Little Johnny and Susie are certainly going to get enough pro-homosexual drek from the media and school that they certainly need a firm example at home. They might say, "Mom tells us Homosexuality is wrong, but she doesn't have a problem with Aunt Joan and her partner." Maybe it isn't really that bad." That not to say that you should make a scene at every family getogether or start preaching against homosexuality. You can be polite, but keep your distance.