For the overall event, it wasn't a good outcome, in that it sounds like FIL didn't provide adequate hospitality to all his guests. But, knowing the backstory, I think it's great that the OP was never sucked into paying for it, and that FIL didn't get himself in financial trouble over it, either. Also, it's important that MIL had a good time, since it was in her honor. I feel bad for the guests who went hungry, but at least the error is on FIL, not the OP, and it was presumably not a life-or-death thing.
I just hope it hasn't taught FIL that it's "okay" to host on the cheap like that... OP, next time he invites you to a big party, you might want to stop at McDonald's first, just in case!