I keep thinking about this one. I just can't imagine having had to deal with this when dd was a tiny baby. If my husband had done this, I'm afraid I would have said something like, "If you make me choose between you and my daughter, I'll choose my daughter."
Women who want to work is one thing. A mother being forced to, when she doesn't want to... [shudder]
I have been thinking about the daycare issue. Perhaps your friend can talk to the mother and mother-in-law? They would probably be sympathetic (I hope!), and perhaps the issue could then be approached from that angle. They could say that they would prefer to be grandparents rather than primary caretakers -- spoil and enjoy the grandchildren rather than having so much responsibility for them.
A last thought is that while nobody can really say that one is better than the other when it comes to SAHM vs. daycare -- there is tons of research which goes in one direction in the other, nothing completely conclusive -- there are things that balance each other out, and one of the positives often cited with daycare is socialization. Since your friend's baby would not even have that, presumably, as the mother/ MIL would be watching only the baby, that takes away a big benefit. If there is no socialization, and it's not economically crippling, why not have the MOTHER be the primary caretaker, rather than the grandmother?
Oh and one more thought -- if I were your friend, I'd be pushing for the FMLA leave rather than the whole shebang. It's limited, doesn't have any far-reaching consequences, and will give her more time to work on the larger issues. Plus, who knows, maybe she will change her mind and decide she wants to work, after all. Not likely, but it keeps more options open.