Welcome Lossol!
We are always sorry one needs this forum but, you will find many that have some ideas and "been there and done that" to help.
I will try and answer a few of your questions and discard if they simply don't help. With a MIL that has some mental challenges it is even more complex. Please do give yourself a pat on the back for being a caring person! It is often more difficult on the caregiver than patient.
After the usual diagnostic tests: cytology, Ct Scan and cystoscope I'll never forget the call from my URO after the pathology report. He was very caring and sensitive as he called my wife first who worked as an RN in the maternity ward at the same local hospital he had privileges at. It was high grade and he asked her if she wanted to break the news. She said no, he is a big boy and wants to hear it personally. I am grateful to both people! Anyway, it hit me like a ton of bricks. I was lucky, I had already researched several options on what if's plus I did not have to have a cystectomy. As it was non invasive I came to the quick realization BCG and non invasive was better than invasive. I also told myself even if it gets worse or BCG didn't work I knew MANY people with worse health problems. This took the better part of only a day. I had it, let's go on and attack! Some people are never even able to get to grips like this for which I am thankful for in my case. Not judging anyone as everyone has different histories, backgrounds, family situations etc. So, you probably have an idea on how to present this to your MIL already. I don't mean to write a book but, you are doing your best and that is all anyone can ask for.
Age 79 also presents other problems as cystectomies are rigorous surgeries. How is her general health other than dementia? What does/will the doctor say? You sound like you are really researching things. One last observation. One simply does not know enough facts until the pathology report is done. Let's hope for the best (no surgery...maybe even it is NOT cancer as unlikely that is the case) and plan for whatever comes down the road. Also, a second TURB is usually done when there are not margins" to evaluate the sample.
Continue asking questions as others should see your post as you go. You do have some time to sort things out. IF, it becomes a surgery option I am attaching a pre-op guide that has too many questions so pick and choose as you see fit.
