@Algunn65,
Note: I am a woman who is about a decade younger than she is. So some things in my experience would apply, while others won't. I'm also married and not dating for the first time in quite a while.
Have a conversation. A calm, gentle conversation. Be extra kind.
Explain that you would rather there was less hair (please don't start off by framing it as shaving as that might be misunderstood; maybe go with that you would prefer things thinned and see how that goes). The reason I am being cagey about this is because she is coming from a generation where you'd generally bikini shave but no go completely bald. So eliminate any misunderstandings and, even if you would prefer there was no hair there at all, recognize that might be a lot to ask for in one go.
I'm not so sure you should tie it to oral sex although I don't think there's anything wrong with saying you don't want to pick hairs out of your teeth. I think that's a reasonable request.
Sex can definitely pressure a woman's bladder, and if she's got any incontinence issues then that exacerbates it. So it might be best for foreplay to get an interruption right before sex. Give her a chance to take care of things. I agree it was probably mortifying for her, so tread lightly here. You can probably frame it as a quick intermission before the main event.
As for her body image issues, that might be due to the age difference. After all, you're maybe 40 years old and so she's well aware your previous sex partners may have been women half her age.
But age 65 (and she might be +/- a few years, but you know what I'm driving at) means she was born in 1953. She was 21 in 1974. So she came of age during the times of Watergate, Patty Hearst, and Hank Aaron breaking Babe Ruth's record. ABBA, Queen, Olivia Newton-John, and Helen Reddy are on the radio.
It's also right smack dab in the latter half of the sexual revolution. See:
https://www.cnn.com/2015/07/21/opinions/kohn-seventies-sexual-revolution/index.html
Anyway, my point is that unless she married very young, or stayed on the sidelines due to religion or fear or morals or any other reason, she was young and single during a very free and easy time for sex for women in the US. Perhaps it would be a good thing for her to try to channel that time -- with allowances for how her body has changed and also how sex has changed in America.