Hi there
If our own experience is anything to go by, there are no exceptions to the Balance of Family Test. My own mother was prevented from migrating for about 13 years because she has a daughter in Oz (my sister) a daughter in the UK and a UK-based step-daughter. All 3 of us were treated as Mum's "children" and that, unfortunately, was that.
We had a very lucky break in that they altered the definition of "step-child" some years later. Apparently it was not meant to alter the way the step-child was treated in the BoF Test but it had the un-intended effect of doing so, so permanent migration finally became possible for my Mum.
We found that there are no compassionate grounds involved. It is a straight head-count of the children and then a count of how many live in Oz and how many don't.
They would allow M-i-L to make extended visits to Oz, but they would not let her use a series of back-to-back long stay tourist visas as a means of "living" in Oz.
http://www.immi.gov.au/visitors/tourist/676/index.htmThe website says that those of 70 or over must have medical insurance for the subclass 676 visa. The reciprocal health care agreement between the UK and Oz counts as medical insurance for this purpose:
http://www.medicareaustralia.gov.au/public/migrants/visitors/index.jspBecause M-i-L is 70 or over, she would have to get her own GP to complete a simple form of medical certificate, which is here:
http://www.uk.embassy.gov.au/lhlh/health.htmlApparently the Balance of Family Test was introduced in the mid-1980s. I can't see them abandoning it after so long.
If there any chance of one of your husband's siblings being persuaded to migrate to Oz?
Best wishes
Gill