Definitely ok. It's easier for her too, to soothe baby when he cries. My mum used to co sleep with 2 of my children when they were babies and things were so much easier for her. She can pat them w/o getting up from bed. But if she were to leave him, to shower etc, best to put him on his bed
It's Alright if the bed is king size and the baby is at the centre of the bed. elevate the baby like put her on a small baby mattress on that bed to make sure your MIL does not squeeze her by accident