Like you, my parents gave me the gift of education and my way of paying it back is to give it to my daughter. I didn't get it when my parents didn't buy me toys, lots of clothes, a car later on, etc., etc. but now I realize their priorities were so squarely in the right place. Having the freedom post grad school to select any job I want is the bets gift ever.
I'll give you the standard advice you probably already know and have heard tons of times. When it comes to saving for your retirement versus kid's schooling you save for your retirement because you can always take out loans for school. As they say, no loans for retirement. That sucks that you were stuck financially caring for your mother and I can see why you wouldn't want that burden placed on your daughter.
As for the amount you are putting in, $250/month, starting at age 7, doesn't seem like it would put you in a situation where you will have too much in a 529. Well, I take that back -- if you have a low income than maybe your daughter won't have too much of a bill. I'm putting $800/month in my 4 year old daughter's 529 and I'm wondering if that will cover college for her. And these days education is a continuing thing, whether it be grad school, changing careers or just wanting to further yourself. If you do save too much, the 10% penalty isn't the worst thing in the world...and I saw some posts on here where people speculated on creative accounting for getting the money out w/o penalty (taking the minimum number classes at the local college and using the prevailing room/board as the amount to take out of your 529).