First of all, Im sorry to hear about your mother's illness. May Allah swt give her health and happiness. Ameen. :)
Your fiance and his family sound like wonderful people!
Do what she wants. Im pretty sure she wants to see happiness around her at a time like this. Your wedding will give her a reason to wake up every morning, things to do, to talk about, etc. Dont disregard this last wish of her, especially if she is passionate about it.
BUT, I suggest you leave majority of the wedding planning to someone else. Please dont spend all of this time away from her so see if cousins, aunts, uncles, friends can help with the wedding tasks.
Oh and NJ is right...having a wedding that your mom was a part of will make you happy for years! I WISH to this day that my grandmother was able to attend my engagement, that I had pictures with her on such a blessed day but she couldnt.
Excellent point. Let others do everything - since you don't care about a lavish wedding anyway and aren't being picky, no need to fuss about all those extra things.