It depends.
Can they come to an agreement with your mother? Would not acquiring her house jeopardize an entire new neighborhood improvement and construction project that would employ thousands of people and raise millions in tax revenue that can be used for the betterment of the society as a whole?
It all depends on what side of the argument you fall on. For many or maybe most or even all of her neighbors it might be a Godsend to have their homes purchased at better than market value and start fresh somewhere else. All without the need to hire a realtor or find a willing buyer.
Like I said. Just compensation is a subjective matter.
As to your other points, that's what the Soviets said when they created the farm collectives. It will be better for everyone.