I don't really have an answer to your question regarding down sizing your room. But I do have some advice on what you shold do. Keep the reservation as is. MIL might really like having something to look forward to, keeping her busy with planning and what-not.
I am speaking from first hand experience. We will be leaving for the world dec 30 for a 10 day trip. As any DVCer knows plan ahead! and that is what I did, Jan is when we planned the dates made the ressies, waitlisted and then got what we wanted a couple weeks later. June is when we bought the plane tickets for me, DH, 2DS and 2DS friend. My older 2 kids are (were) out on their own and busy with "grown-up life" so they were not going this trip.
Aug 6 my older son was killed in a car accident. I thought I'd never want to go back, the memories of all of us there, and just feeling so SAD all the time.

Thanksgiving was hard, first one w/o him, Christmas was even harder (although I am getting pretty good a pretendng interest and doing things) But I can say that planning for Disney has given me something to keep my mind occupied. it will be different, I will still probably have my moments (cry every day) Really what am I going to do over Christmas break (school librarian) if I didn't have any projects. (Also I am painting his room, into a room for his baby daughter, born Oct 7) Just doing things to keep busy!
MIL will need something to get her living again, this may be it. Right now don't even ask her about it, with numbness and "brain fog" she probably won't remember alot about the next few days any way. But in about a month casually mention it, let it sit out there for a while then bring it up again weeks later. In a couple of months she may be ready to remember she is still living, and there are still people who love her and need her and want to be with her, and she will actually "like" having something else to talk and think about.
So sorry for you loss, be there for MIL and your DH, and as I frequently said the first couple weeks (and even now) just breathe in and breathe out, that's all you have to do!