I suggest that self-stimulation has nothing to do with causing you to be abused or your husband's struggle with pornography. I agree that your discomfort with this is the result of your experiences. I suggest it's important for you and your husband find a way to deal with your own experiences so that what your daughter does doesn't become such an emotional issue for you.
Self-stimulation is just the beginning of her sexual life. It's not sexual for her but it is for you which I suggest causes you to put too much energy into the situation. How will you feel and react when she starts flirting with boys? Will you be able to keep your emotions surrounding sexuality at a healthy level so that you can teach your daughter that having sexual feelings are normal and that there are appropriate ways to manage them? Or will you be frightened for her and what may happen and thus pay too much attention to her sexuality.
I ask these questions because of my experiences with my adoptive daughter who was sexually abused. I was more aware of her sexuality and had to be aware that I didn't over react to her experiences as she matured. Fortunately, I had training and skills with which to deal with these issues because I was a police officer trained in investigating sexual offenses. Otherwise, I think I would have been worried much of the time as she entered puberty.
My daughter now has a daughter entering puberty and she has told me that she is purposely keeping her daughter a "little" girl as long as she can, while at the same time reading a book with her that is written for tweens about growing up. She said that sharing the book with her daughter, just as I shared a similar book with her, helps her to maintain a calm and more natural response to what is happening with her daughter's body. My daughter said, when her daughter was a toddler, that it was difficult for her to be less reactive in the way that she protected her daughter. She realized that if she allowed herself to be worried or always concerned she would hamper her daughter's growth into a confident teen
I feel that I'm not explaining this very well. It's important to find a way to not always associate what your daughter is doing, not doing, or feeling with your own experiences and feelings. Let her be a child, untouched by your negative sexual experiences.
As to self-stimulation at her age, it is good to teach boundaries with this issue. Telling her that doing so should be in private is just a boundary and should not be an emotional issue. Some things we do in private and some things are OK when others are around.
The way my daughter and I approach privacy is that the reason our privates are called privates is that they are private. If any activity involves our privates then we do that activity in private. In our homes, it is OK for members of our immediate family to see our privates or be involved with private issues, not just those involving our privates. lol sounds confusing but it's not.
At the same time we teach modesty and respect for each other's privacy. Asking that she self-stimulate only in privacy is a reasonable boundary. It's also reasonable to allow her to do it when family members are around. What is best is what you're the most comfortable with.
My parents were not comfortable with self-stimulation or any movement that appeared to be sexual in nature. As a result I did grow up feeling uncomfortable with my sexuality. I don't think I was ashamed. I just didn't think sexual activity in any form was appropriate, even in private. I was even uncomfortable with mild flirting or teasing that others wouldn't even consider flirting . I eventually was able to realize that sexuality is healthy and then be able to form my own boundaries.
As you said, it's important to accept what she's doing so that she's not ashamed or thinks she must hide it. Giving her boundaries while accepting the activity is a good way to do that. Ignoring it while still allowing her to do it probably is not as good a way tho it's better than refusing to allow her to do it. How you feel will come thru to her even when you don't express your feelings out loud. That is why it's important for you to understand your own feelings and find ways of managing them before she becomes a teen.