Yes, she loves THIS quilt, but she is also unrealistic about what can be done and how much effort it will take. After your repair, the remaining fabric will continue to deteriorate, and there will be more holes. I would explain to her that sometimes quilts just cannot be repaired and should be left to die in dignity. I would offer to salvage a few of the Dresdens and put them under glass to hang on the wall, and tell DH to pick out a pattern for a new quilt, and this time she will know that it's her aunt who made it just for her.