When we moved from St. Louis we helped transition my daughter to a big girl bed at 14 months by decorating her room and gettig her bed all set up so it looked really pretty. Then she helped arrange her toys...the whole time we (myself and my parents) kept talking about Lucy's big girl bed and how fun it would be to sleep in the bed. I think if the child feels ownership in her room, they are more likely to want to stay there and transition to it. That being said, my daughter does still usually join us in bed between 4 and 6 in the morning. It's not every night...just when she wakes up on her own and needs some hugs or some milk from a sippy cup.
I agree with what people are saying about the co sleeping not being a problem, except that as she gets bigger, the couch will get smaller. So, they should either transition to the bed together or try to put the child in a big girl bed...that way there is more room for Mom to go lay next to her if needed. I too am pregnant with my 2nd and we are trying to make a lot of the transitions that will come with having a new baby now so that she doesn't connect them with the new baby (i.e. I'm carrying her less so she walks more, switching to a booster seat, taking her nuk away). All of these are transitions that would happen around the time the baby came (just b/c she'd be turning 2 and getting bigger) but I'm starting them early so she doesn't blame the baby.
Just keep supporting your daughter-in-law as best you can...even if it's not your way...it's the way that's right for her and her family.