I don't know what the etiquette rule is.
But i think that if you don't want this person in your house (and you have good reason for this), then you don't have to have this person in your house.
now - this does mean that you also have to deal with whatever fall out there might be. you need to be upfront, clear, and firm with you SIL tell her "I want to have this party for you but we will not have X and Y at our house. so it's up to you - If you need to have X and Y at the party, then I am going to have to back out of hte hosting. if you are ok not having them, then i will carry on." you might add that you will do your best to hold the party after cousin leaves town.