What do you think of me telling my daughter I don't want her to be a step parent?
Is it because of the logistics of being a parent to a child, or just the thought of not having control over your kids life?
I don't like her step daughter and I think she doesn't deserve to live this life of taking care of her.
You dislike your step daughter, but it's not your move to make regarding your own daughter's choices. Stay out of it, but be there to support your daughter. Getting yourself more involved will only make yourself seem like a meddler.
It's not up to me and my happiness matters than anyone else's.
Your happiness is not more important than everyone else's and it's wrong to assume this. It's best that you respect your daughter's decision regarding her stepchild and not attempt to create conflict for her.