This takes me back to when I was a kid. I remember those fancy hand towels that were stitched with something ghastly kitschy and super scratchy. Next to the bars of soap in pretty shapes that smelled to high heaven. They were in the type of bathroom that had a carpet mat around the base of the toilet and a plastic foam squishy toilet seat.
~shudders~
Here is some nightmare fuel for you.
Interior Desecrations: Hideous Homes from the Horrible '70s Lileks, James
And. https://www.lileks.com/institute/interiors/index.html
The house I grew up in was built in the '70s, and all of the built appliances & fixtures were either "Avocado" or "Harvest Gold" --yes, including the toilets! The guest bathroom was green and white (decorated with pink, for some reason?), and the master bath was all in yellows and browns, with a wooden(?!) seat.
My parents remodeled the kitchen & dining room a couple of times, and eventually replaced all the appliances, but those bathrooms stayed just as hideous as the day they were installed!
Kind of reminds me of the Southern restroom and the decorative hand towels. Growing up, every Southern house's bathroom had at least one very fancy hand towel hanging neatly folded near the sink. But woe be unto anyone who used it! It was purely decorative, and no one was ever supposed to touch it! That was what the (often semi-hidden) plain towel was for.
I think at first, it was a matter of having a "good" towel for guests, and another one for household members. But eventually it evolved to where even guests weren't supposed to use these fancy towels, which were heavily decorated and often not made of absorbent or even moisture-tolerant materials.
Is there a standard location in the southern bathroom where I can find regular hand soap? Always seems wrong to use the fancy decorative soaps of which there are always several on display, but there is no other soap in MIL's guest bathroom that I have ever seen. Along these lines - a few years ago MIL started putting out seasonal paper towels / napkins in the guest bathroom. Reading this, I bet I contributed to that chage after years of using the only towels I could see in there - the fancy linen ones.
Ugh! Sounds like you may be experiencing a further evolution of the phenomenon, in which the entire guest bathroom is
only for guests, and off limits to household use? In which case, there may be no practical accommodations, only decorative versions. That's a tough one, made worse by the fact that you're in a grey area as non-resident family-in-law...
Maybe bring your own soap? or gift her a really fancy liquid soap dispenser that matches that decor?