According to a Czech native friend, it's not clear who's aunt she is watching, so I think "She was watching aunt's mouth." should also be accepted?
That sounds very odd in English without an article or possessive. "An aunt's mouth" and "the aunt's mouth" don't work either. Options with other possessives, however, also are accepted.
Makes sense! I'm learning a fair amount of English in addition to Czech here :)
Why not "she looked at her aunts mouth"?
She looked is a single action, we translate that with podívala se (perfective).