When do you "know" it's time for Assisted Living?

It is time. And you may be surprised that she likes it, that she has more to communicate with or more who accept her just as she is. More activity choices.
I think that you already know, in fact, that it is time, and in all likelihood past time.

You can do what is best for your well being and still meet responsibilities to MIL. As long as MIL is cared for and as long as you show her she is loved that's enough.. Would she rather have you and your husband doing the care taking? Most likely she would, but that is a want on her part, not a need.

If you are asking the question then it is time. And as to whether Assisted Living would be better for her or just you, I think the answer is that it will be better for both of you. A lot of the daily responsibility will be moved off of your shoulders and you'll be able to have more relaxed and happy visits with her. She'll have someone available 24 hours a day in case of emergency and keeping a professional eye on her. It's really a win-win. You'll still find that you do some of those things that you currently do even with her in assisted living but certainly not having to all daily living tasks such as teeth brushing reminders. Also it's better to move to assisted living too early rather than too late. My dad waited (stalled) until it is harder for him to make friends due to hearing and sight issues. Had he entered earlier he would have taken more advantage of activities and made friends more easily.

This sounds like a miserable existence for you and your H. How many hours a week does all this tending take?