Jenny, I'm finally caught up on you. Sorry I have been missing from your thread. Here are my thoughts.
1. Happy belated b-day to your D. I'm glad you were able to enjoy that day. It has been so long since my Ds were that age and it is such a fun age. Make the most of it
2. I wouldn't move ahead with anything on your house at this time. Sure it would be easier for H if you bought him out, but won't it put a strain on you. I'm assuming MIL isn't charging him rent. Go ahead and research it and let H know you did. Just tell him you aren't to decide at this point.
3. Clearly your MIL has her own issues to deal w/. I know mine does and maybe if she would have dealt w/ some 25 or 30 years ago and had a healthier marriage, H and I might as well. I do see us repeating the pattern of his parents. Although they have been married over 40 years, they haven't been happy since I've known them.
4. I thought I was the only one overly hopeful. I haven't brought up our R to H in months. H hasn't never brought up D, that has only been me. I have no idea of his intentions. As for, until those papers are signed, I would say there is hope.