In what frasier episode does his mean aunt die and he gives the eulogy?

The episode you're thinking of is "The Last Time I Saw My Father" (Season 3, Episode 14).

This episode features the death of Frasier's Aunt Mildred, who he describes as "a woman who had a very special gift for making everyone around her feel a little bit miserable." He reluctantly agrees to give her eulogy, which turns into a hilarious and revealing look at his complicated relationship with his aunt.