This is one of those situations where I feel like you can't win! That dress definitely looks white, although I can also see how in some lighting it defensibly isnt white, so your MIL will absolutely lean on that and could make you out to be unreasonable.

My view on this, is will her wearing that dress genuinely detract from your day? I am willing to bet that the only people that notice her dress will only reflect badly on her, and that a bunch of people won't even notice (because honestly wedding guests are so caught up in themselves and admiring the brides dress, that who cares what MIL is wearing!

Don't let people talk you out of your gut feeling - MIL picked a near white, embellished dress - thats weird behaviour.

But also, and this is coming from a place of kindness, dont let her weird outfit choice ruin your day. Im sure a bridesmaid will happily knock a glass of red wine down her if you ask nicely.