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My father in law has agreed that this is a good idea . My mother in law stormed off in a huff. Now the whole idea has been dropped.

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Who is assigning their POA? FIL or MIL? Is he as signing POA for himsrlf and she's upset he didn't choose her? And who (per your profile) has Dementia?

If you give us some more information, we could give you better answers.
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My father in law has diabities. He is taking care of mother in law ( attempting to) that has undiagnosed dementia- she refuses to go to the doctor . She's pretty bad off. My father in law says he will give kids POA as we can't trust MIL decission making abilities should he fall ill. She in turn being physically healthy but mentally unstable will need help.we want both. He agrees- she flipped out. I think she thinks it means we'll take all her stuff. She is very paranoid and has all the cabinets and drawers tied up with bunggy cords.
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Can you get her seen by a geriatric psychiatrist? There are meds that may alleviate some of her symptoms.
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Do you want to get a medical or legal/financial POA? And if the latter, do your parents hold all their assets jointly, with rights of survivorship to each? Are there other billings or potential heirs involved?

I'm thinking of a way around the issue of your mother signing; if her dementia is as obvious as it seems, she might not be considered to have sufficient cognition to execute legal documents.
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I agree with GardenArtist, if your Mom-in-law had serious memory issues, she wouldn't be able to appoint or sign a Power of Attorney. No attorney would allow her to do that.

Make sure your Dad-in-law signs his Power of Attorney, if he hasn't already.
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Yes, get dad to do a broad POA. That's a good start. You may at some point have to get legal guardianship over mom. And dont even tell mom about dads POA, just do it. It will help tremendously with finances and many issues.
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