For me, it depends on the guest and my relationship with them. I have never changed my decor, but I do things to accommodate guests all the times. Fore example, I'll remove scented candles from the guest rooms and bathrooms if my guests are sensitive to the smell. I once moved the guest bed into my office so that my grandmother wouldn't have to climb up the stairs. I buy my guests' favorite drinks and have them in the fridge for their use, even though I personally don't like it. And while I've never drastically changed my eating habits, once when I had vegetarian guests, I did find recipes that I would also enjoy so that I could prepare one meal for everyone.
There's a limit to what I'll do, of course, but small accommodations, within reason, are not a big deal for me.
For the picture, I think this is something that the husband and wife just need to work out. I can side with the wife that she shouldn't have to rearrange her artwork because of her MIL's personal distaste for it. At the same time, I think that if I had a picture that offended a family member, for me, it would be a pick my battle thing. I wouldn't go around my whole house taking down every little thing that the family member hated, but one picture...I probably wouldn't fight it too much.
That being said, I wonder how the MIL would react if she saw the picture? Because if she said anything about it or insisted that it be taken down, she'd be the one I'd call rude. The husband might be afraid of her reaction, but they shouldn't have to hide their things from his mom.