Just so many red flags flying in your post.
Is your MIL mentally incompetent? If not her desire is to live out her days in her own home. You might not think it's the best option for her, but it's what she wants. She doesn't want to move, she doesn't want assisted living, she's not sure she even wants to live in the same house as you do. You might call it stubborn but perhaps she see you as the stubborn bossy ones. And who are you to override someone's decision about how she wants to live the rest of her life? I'm speaking as someone who has lived this and came to realize that taking over control of someone's life because you know what's better for them in your mind is just a form of trying to control something that's uncontrollable. You see her a ungrateful when in fact she isn't ready to give up control of her life and in fact a lot of her dignity.
My DH Uncle at 92 is going thru this right now and insisted on being discharged from the NH with the full awareness that a slip and fall at home, which has a good change of happening could kill him. He wants to be home and doesn't care that he might have longer life in the NH, he's ready to accept whatever happens. He sons freaked out and they had huge arguments over his decision that could very well linger and cast a shadow over whatever days he does have remaining.
If your MIL is mentally compromised you have other issues to contend with. In that case see an elder care attorney about the pitfalls of caring for someone in a compromised state and protecting yourself from misuse of funds issues.
Let me say you are not just leaving her there to die. Honoring her wishes and letting her have a say about the rest of her life is one final tribute you can give her.
You're putting too much pressure on yourself by saying you are a "family first kind of family" what does that even mean? You will have failed some internal test if you simply let your MIL's life play out the way she wants it to?
My last bit of advice would be to tell you to love her and respect her wishes and tell her if she ever wants to change her circumstances your family will be there with bells on to make that happen. Don't make it you vs her and perhaps when she thinks it her call she will be willing to open her mind to life improvements.
Enjoy your holiday with her and don't even bring this up. Make it about family and Christmas just dial back and see what happens.