Thanks for all the replies. I think the comment about me still getting them if she died was meant as a joke, probably because she knew I might be upset and was trying to lighten the mood. She has told me before that she wants me to have them if she dies. It's not the first time it's come up.
When she first asked me, she specifically said she knows I'm not religious but she didn't care. Her husband is also not religious and apparently the new godparents are someone she's known forever and her partner so I don't think her husband had any input.
As much as I'm not religious, I grew up in the catholic church and I'm not anti-religion so I still would have done everything she wanted me to as a god parent.
I guess it's not so much about not being chosen, really. It's more the fact that she asked and then took it away. And made a crap excuse. I guess I feel rejected because I'm the one who is always around, who actually knows her daughter and babysits all the time and sees them every week, and she's decided I'm not the one she wants to choose as a special person in her child's upbringing. Well, unless she dies.
I don't know if I'll say anything. I kind of feel like that moment has passed. I was too shocked to say anything at the time and she changed the subject quickly. I don't know how to bring it up again now.