My condolences on the passing of your MIL. What a tribute to her to have the quilt drape her casket.
As for the lace, buttons sound fine, but I think hand quilting it on would be nice also. Big help here!! LOL
I wouldn't FMQ the background blocks. I would perhaps crosshatch by hand. I couldn't bring myself to do machine stitching on this beautiful heirloom quilt. (JMHO) Embellishing with a bit of embroidery would be very nice. You have one lucky granddaughter. I made a SBS/OAS quilt for my granddaughter about fifteen years ago and hand quilted it using crosshatch. I did not quilt over Sue and Sam. Just echoed around them. It turned out pretty nice. I alternated the Sue and Sam blocks.