If they weren't snooping around before, news of a tooth fairy visit is sure to get them busy and on the hunt!
From the 5-yr-olds I know, the subject of meetings 'could' come up, but the cat is out of the bag and doesn't matter if the cousin was asked to inquire or not.
This may have been a joke, but I think it's a really bad idea:
Tell your five-year-old to make up stories when asked about you. Make a fun game of it to see how outlandish of stories he/she can come up with.
Closely supervised visits is probably best for now. If there comes a rift in the family because of the new information provided by the 5-year-old, the child may start having feelings of guilt over just having what to him/her was a nice, normal, honest conversation with grandma & grandpa. Terrible feelings of guilt and isolation can develop and are tough to overcome.
-Aude.