Hi DIL,
I feel for you-- I went through a similar situation with my dad. My situation was a bit different in the sense that it was my dad and not father-in-law, but I still went through the same struggles of staying strong for him when all I wanted to do was cry, how to stay strong for my daughters, what to tell them, etc...
This board was my #1 support during those times. Every time I had a question, I came here. I tried to stay away from books and certain informational websites. Some of it is good for basic information, but the statistics and other information can be misleading. The people on this site are honest, supportive, and I hope you won't feel silly any longer when posting here. We all have something in common here, so in essence they're not totally strangers.
As for my support, I kind of learned as I went. When my dad was down, we cried together. When he was up, we lived as normally as possible-- visited family, went shopping, watched movies together, etc... When he was in an in between stage (which seemed to be alot), I would stay positive and happy. I started a free website on Geocities where I posted updates on my dad'a diagnosis, treatments, etc... and then gave the link to anyone and everyone we knew across the country. It was a nice way to support my dad and help everyone keep updated on his treatment.
As for my daughters, they were 6 and 2, so I struggled with what to tell them. My 6-year-old knew that my Grandpa had died the year before from lung cancer, so she knew that cancer was serious. I thought about not using the 'c' word, but I figured at some point, someone we were with would mention it and then she'd freak out. So, we talked about how cancers are different, etc...etc... It was definitely a conversation I never thought I'd have with a 6 year old. But, she was very understanding. Both my girls knew that Grandpa had surgery on his neck and they couldn't touch it, and some days I had to explain to them that Grandpa didn't feel too well and they couldn't jump on him, but for the most part, the girls made my dad really happy and cheerful when they were with him.
So... that's how I handled being in the caregiver postition I was in. I hope pieces of it may be applicable to your position. Feel free to ask me any other questions if I can help at all. I remember how overwhelming it all is and I would love to be able to repay the site by assisting someone else in the situation I was in last year.
Good luck and LIVE STRONG!