My impression (happy to be corrected) is that when people say they want to "die with dignity", what they mean is minimising the period when they lack agency. Sometimes disease does cause us to lose all agency doesn't it?
Depends rather on your understanding of the term, but it’s not just loss of mental capacity that people want to avoid. The end stage of life with illness can result in miserable loss of bodily control, although the mind may be still sharp. I’ve known people who have lost either physical or mental capacity. It’s grim. I won’t elaborate.
The issue is an individual’s right to choose rather than be told. It’s an important topic, but feel you might be oversimplifying the reasons for making that choice tbh. Whatever the simplicity of the moral issue - control of your own destiny- fashioning good law around that will be tricky.