Okmrsmommy-36, CPmom to DD-16 and DS-14
Some may indicate this is ordinary "sexual experimentation" but at the ages of the kids and the background you describe, clearly some intervention is needed.
Good luck and you have my prayers for a positive outcome in all of this.
You NEED to talk to your granparents. You need to tell them (calmly) what you witnessed and what your young cousin told you. You need to explain to them that allowing young kids to witness pornography can be considered a form of abuse. The child probably needs some counseling. I would guess that most 9 year olds do not know how to handle sexual feelings. She probably feels bad and perhaps does not understand why what she did was wrong. Even if she has seen porno flicks she probalby does not have a full understanding of adult sexuality at age 9. Someone with professional experience might be able to help her work through this experience.
I would also have your daughter see a counselor. I would probably not use the counselor at school as I would be worried about confidentiality within a school. Your daughter may feel some shame over something because she doesn't really understand what happened, just that it made her feel funny and angered you. A professional might be able to help YOU explain to your daughter in an age appropriate manner.
I am not surprised that all the responses to the incident are reactive and believe this to be abuse. The age difference between your dd and cousin is not that great and it doesn't sound like your dd was cohersed or threatened in anyway. I truly believe that because of the child's background, you may be over reacting. Your post doesn't give enough detail to truly determine if what happened is normal or not, but if you think it could be, I urge you not to make a big deal out of it and embarass both your dd and your cousin. I hope all has gone well.