BTDT...so I definitely have an opinion.
My mom has suffered from Alzheimer's since 2002. I will tell you how I and my siblings (there are seven of us) have handled it. When the time came for her to leave her home, she moved into an assisted living facility (holy cow, they are expensive!). It was around $3-4K a month, IIRC. We used the only assets she had...the money from the sale of her house, which was around $50K, to keep her there as long as we could. When it became apparently she needed more care, we applied for Medicare for her...I don't know all the ins and outs of that, because one of my older siblings handled it, but I know that she was basically flat broke at that point..you HAVE to be to get on Medicare and get into a nursing home. We finally got that all set up, and she moved into a nursing home in 2005. Once she was in the nursing home, we decided she needed a "sitter" to keep tabs on things, as we couldn't be there every day (my sister lived in the same town, but worked full time, and other family members were 3-5 hours away). So, we found a wonderful woman to "sit" with my mom every day. But how to pay for that...out of the 7 of us, 6 are in a financial position to pitch in. We knew one of my brothers was in NO position to help, so we didn't even take that into consideration. We're FAMILY...you don't nitpick about things like that with family. And, you can't get blood out of a turnip, KWIM?
So, the six of us who can afford it each contribute $3,000 per year to pay for her sitter. While my DH and I make a decent living, several of my other siblings are VERY comfortable financially (and yes, I know this for fact). We would have never dreamed of making our practically destitute brother contribute...he has NOTHING. In fact, we help HIM out as well.
So, I personally think your brother #1 needs to GROW UP. He's being a jerk, and you really just have to ignore him.
Now, I will say that I know a bit about having a parent with dementia (my dad also had Alzheimer's and passed away in 1994). It's going to come to a point where your parent needs full-time care...and I dont think Medicare will provide that in-home. It's nice that he has a MIL apartment, but someone will eventually have to be with her 24/7...you don't even want to think about what that will cost! I know you said you have a plan in place, and that is great...if you don't mind my asking, how does your brother think he can handle your mom there full-time when she progresses in her disease?