I am lucky that I have not had to make the decision yet, although my parents did for each of our family dogs. So take what I say with a generous pinch of “she doesn’t know what she’s talking about”.
Having the dogs I do, there is no doubt in my mind that depression, fear, and anxiety are far more distressing than physical pain and discomfort.
When you look at people suffering from dementia and the like, the worst part of it is when they are afraid. It’s not when they don’t remember their family members, or become uncommunicative; that is hard in the family, for sure, but it’s not the thing that affects the patient’s quality of life as dramatically as when they are fearful. Especially when they are unable to effectively communicate that fear.
I think it’s the same for our dogs. It’s hard on us to see the degeneration, but I really think that their state of mind is key. There is a world of difference between “off with the fairies but content” and “present but fearful”, and a whole spectrum in between.
My thoughts are with you; it's a decision we all dread having to make.