I'm going to go out on a limb and say that this could be a positive thing.
No one but the OP is qualified to judge his relationship with his wife and MIL. Those who try to do so and find the scenario weird or uncomfortable are trying to inject their own value judgements into a situation they aren't qualified to assess.
Keep in mind that a few women actually enjoy diapering adult males. I've met precisely two of them during my lifetime, and who's to say the OP's MIL might not share that characteristic? Years ago, I had an older lady tell me she "could not wait" to change my dirty diaper. When that opportunity arose, she had her hand down the front of my diaper to check me, then had me finish a bottle on my own while she changed and cleaned me. I don't think I've ever felt like more of an infant, and the lady involved showed every sign of enjoying the experience.
One respondent noted that "what's in the cat is in the kitten," and judging from what the OP has told us about his relationship with his wife, who seems a bit of a "Dommy Mommy," that may well be true. As long as wifey doesn't become jealous of her mother, this odd scenario might continue unabated for some time with distinct benefits for everyone involved.
I, for one, wish the OP luck. I'll be interested to know how the routine develops.