Wow, thats one of the most insulting requests I've ever heard, and from the mother of one of your friends! I would never accept anything like that for a bag. That mom should be ashamed of herself to demand such things from her daughters friends - even if she would pay for the weighloss therapy/laser hair removal/what ever. (And someone should tell her so).
But, this is your friends wedding, so it's not just about a bag or not - you would probably want to ask yourself if this is a friend who is important to you, and also if she would do the same for you. Maybe, if this is a frienship you value, you could work out something with your friend - she clearly needs to speak up to her mom, or she'll lose both all of her friends as well as her dignity. If her mom could agree to ask nicely, and offer to help the bridesmaids to look their best - not demand an extreme makeover, it might be easier to accept. And as to the ugly dress, I guess that is not uncommon and often part of the bridesmaid thing... As long as you're not paying for it, maybe you could accept it to make your friend happy.