If that were me, I think I would have done more that tell her off. I might have painted on one of her paintings, "to see how it was made".
this past xmas i was part of my GF's family Secret Santa and i pulled her sister's BF's name. i made all my gifts this year because we're dirt poor, and so i planned 3 really cool black and white mixed media layered collages based on three songs from his favourite bands, and put them in handpainted frames. all the materials were in my inventory already, and it took almost 30 hours to make all together.
the sister was actually ANGRY that i didn't spend any money on his gift, and said it was totally unfair since her BF spent $100 on his Secret Santa.
she offered to take me to Wal-Mart and have me pick out a gift for him, she would pay for it, and i would write my name on the tag like a preschooler. i said "thanks but no thanks" and she told her BF that i wasn't buying him anything. she spent WEEKS ranting to the family about how selfish and cheap i was being, and how even though i KNEW what he really wanted for xmas, i wouldn't accept her charity to buy it for him.
it turned into a giant family drama and he ended up really liking the pieces anyway. he knew right away what songs they represented and is putting them up in his guitar room.
she still doesn't think she did anything wrong..