Of course, we're all different and so we would all react somewhat differently, but I do think the MW was somewhat out of line to say to you that she wouldn't have advised it (was she an older, 'old school' midwife?). That could put you in a position of 'guilt', expecially after telling you they are very upset (although, duh, most couples would be) and that is somewhere you really don't deserve to be.
You've sought the advice of women who have 'been there' which was a caring and responsible step to take rather than blithely advising your friend. From what I have read here (and other places), and my own experience on April 1st delivering at 16+5, I can say that overwhelmingly women do not regret seeing their babies. I've read many stories of women regretting not seeing them. And as lionheart says, if they didn't feel up to it, photos could have been taken for a later viewing (infact, I hope they've been advised they can still take photos - for me, I was told the baby would stay on the ward until I was discharged and I could see him/take photos any time I wished. It was a great comfort).
I do find it rather odd that the midwife wouldn't have advised it (unless the baby had passed a long, long time ago) as she must have some experience of how women respond to this tragic turn of events and how it can ease the grieving process.
ANyway. I wanted you to know you've been a good friend, a great one. And to tell you that, if you're up for the job, she'll probably need you quite a bit more over the coming weeks. I talked as a long, rambling stream of thought for hours at my best friend about 10 days after delivery. She also bought me a huge pot of chilli over, a jo malone candle, did some washing up, and just generally heaped love and care on me that day. She has a very busy fmily/life of her own so it was just the one day, but it made such a huge difference to me (and probably would have become overbearing if it went on each day anyway!). It helped me pour out my thoughts (irrational and not) and kinda 'regroup' for another round of feelings. All quite difficult to explain but I'm kinda saying she may need/appreciate practical help, or an ear/shoulder, or something 'nice', a distraction, and/or all or none of the above!! It's certainly a tricky job to take on, to be supportive during a grieving period, but let her know you're there for her in whatever capacity she needs. You'll know her best - she might be better left alone for a while.
Ugh. I'm not an expert. I hope I'm not coming across as teaching you to suck eggs. I think I'm just really sad that the midwife has said that to you when you're just trying your best for your friend. She's lucky to have you.