Marvelous, marvelous job! As noted above, it's good to see a story that treats Vernon and Petunia like human beings, yet does not excuse them. Poor Petunia, it's easy to believe this would be how she developed into the horrible woman in canon. The scene with Lily in the hospital just rings true: poor Lily desperate for her mother and unable to do anything about it, while Petunia is left doing all the dirty work and thankless jobs, earning nothing but Lily's scorn.
And the last two paragraphs are wonderfully chilling. Great job!