I've seen this question before. I don't know if I replied to it, but I'll give it a try.
Dear Optimistic Pessimist,
The grammar may be difficult for you because you may not understand the situation at hand. Rather than search for an obscure rule of grammar, humor me and put yourself into the situation that is being described. Pretend you are listening to the speaker and watching the scene/situation.
In this scene, there are:
1. The speaker (who is either the son or daughter of the mother and who is telling the story)
2. The mother
3. The grandmother
The speaker is describing an incident that took place in the past. He is speaking to an audience - or maybe just to you. The point is, he is narrating an interaction between his mother and his grandmother that he observed. He is now recreating the scene as if he is there, in person, in the room.
Put the scene in another light:
'Where are you going?', my grandmother would demand of her daughter, (aged) forty-six and a widow for fifteen years.
'I'm going out', my mother would reply, calmly. As she spoke, my mother would look at my grandmother as defiantly as I imagine she looked at her when she was 16 years old, and exactly how she would always look at her when the subject came up.
That is what the sentence: "My mother's reply would be even and shewould look (as) defiant as I imagine she had done at (the age of) sixteen, and always would do" means.
The author's use of English is sophisticated and represents a style that many readers rarely encounter. Some native speakers may find it inspired, others may find it necessary to re-read the sentences several times before understanding the situation completely. At any rate, understanding the context can only help you grasp the grammar.
I do hope this helps.
Student or Learner