Z - It sounds like things are definitely on the upswing!
When my W and I bought our house nearly 10 years ago, we insisted on a first floor master with the intent that her mother was eventually going to move in with us once she could no longer manage her house down in Florida. Unfortunately, a heart attack + major stroke + likely brain damage from overmedicating doctors forced us to place MIL into a nursing home close to us. It's a very wonderful thing that you and your W are doing for your FIL. I hope that it works out well for all of you. It seems that the good will, cooperation and mutual support that you're building with the house renovations may be the cornerstone for successfully negotiating the challenges ahead.
Also, it's great that you and W can "cuddle" again and that she is very receptive to it. That's something that I long for in my sitch again - don't know when or if it will happen. But we have to keep being optimistic. Check in when you can and build on the good times...
