Breathing problems; has anyone seen someone with this in their own family?

I think this needs to be discussed with her lung doctor. Ask if there is something that can relax her making it easier to breath. On hospice she would probably be given morphine.

It seems like everyone on my mom's family had that or something similar. My great aunt and her daughter had it the worst. I know they were diagnosed with COPD but what you described sounds exactly like what they had. I feel bad when I remember this but I use to hate it when they came for a visit or worse if I visited them. Within a half hour after we were together I would start to feel like I couldn't breathe it was horrible. What seemed to eventually help, even before they quit smoking was losing weight. Is your MIL overweight? My great aunt was prescribed the wrong blood pressure medicine (not entirely sure if this was true but it's the story I was told) she lost about 100 pounds and finally sounded like she could breathe. Unfortunately she developed dementia shortly after but she lived to 97. Her daughter wasn't as motivated to lose weight but she quit smoking. I think by then it was too late which is sad because she had no problem quiting. She was so happy that she didn't have to go through what most people who quit go through. Then she died suddenly about a month later of resp. arrest. My grandmother on mom's side had severe COPD. She originally had a DNR and went into the hospital originally was put on respirator. The idea was if the took her off the respirator and she couldn't breathe on her own that was it. Unfortunately her primary Dr was out of the country at the time and the Dr at the emergency room was leary of giving her any thing for the air hunger she managed to convey something like "get me the eff back on the respirator or I will come back from the dead and kill you". Or something like that lol. So she was able to void her DNR. When her primary physician returned he was really angry. I guess there were specific instructions to combat the air hunger he just decided it wasn't something he wanted to do. He was fired shortly thereafter. When her Dr took her off the respirator she was breathing fine. The COPD got her still not that much later but she never signed another DNR. Anyway don't know if any of this was helpful I originally meant to just ask about her weight to see if there was a correlation.
Good luck.

Unfortunately this is a serious illness that will likely not improve. I have to honestly say that those with interstitial lung disease do suffer greatly to breathe.

I noted that you said ILD was the “only” diagnosis. Consider that how a person gets oxygen is through the lungs, ILD wipes out that ability. The lung surface is damaged and those people are gasping for air. If lungs are affected so is every other body system as the lungs provide oxygenated blood to the entire body.

I am sorry both she and her family are going through this awful diagnosis. I would consider having hospice evaluate her soon to make her comfortable to the end of her life journey.

I found a lot of information on the net about Interstitial Lung Disease, for example on https://www.medicinenet.com/interstitial_lung_disease_interstitial_pneumonia/article.htm. Your MIL's symptoms sound like a very unpleasant case of it, unfortunately with not a good prognosis. Best wishes.