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Considering what I've seen with relatives and clients who died of cancer, this person will likely become unable to care for the kids on her own before she dies. In that case, going through the process of a private adoption may be a good idea, and the adoptive parent(s) could still allow visitation with her until she dies.
You'll definitely need to find out more details before you can make any sort of commitment, such as the bio father situation, whether there are other extended family members who might want the kids, the specific type of cancer and prognosis.
I wouldn't mention anything to your agency until you find out more.