My son frequently has to be told to stop touching himself. It's normal.
We've decided to pick our battles. In the bathroom, he's allowed to touch (and baths). It's hard for us to deal with, but at least that rule got him out of touching anywhere else (where it could be much harder to deal with).
You're in a tricky spot. If you overreact, you can actually make her want to do it more, because most kids thrive on doing things they know they aren't supposed to be doing.
I would definately keep the panties on over the diaper to give her less access. While I would normally tell Daddy to get over it, if it bothers him that much (and I could see why it would), you take over bathtimes until you can get your daughter's hands under control.
Probably the best thing you can do, though, is to calmly tell her to stop, or to ignore it. She's discovered a new body part that doesn't get mentioned - ever. While you teach her about her fingers, toes, ears, eyes, nose, tongue, hair, etc., that one is always left out. Once she becomes acquainted with it, she'll move on to something else and you won't have as much a problem with it anymore.