Dogs provide a LOT of unconditional love and affection. My dog gazes into my eyes warmly, on a daily basis. She follows me from room to room. If I leave her sleeping in one room and I make it into another when she wakes, she'll give a little bark like "Hey, where'd ya go?"
Your FIL sounds pretty checked out of life - useless as a babysitter, couldn't even sleep over for a night or two, etc. Maybe your MIL really appreciates the companionship of the dog.
I would not put my dog in a kennel either. I grew up with a dog who'd give me kisses for up to 20 minutes straight. I have great skin, and it never made me sick or anything. I let my current dog kiss my babies. They haven't died yet.

Our dog does not shed.
Just ask your BIL to vacuum up the dog hair before you come home next time.