It's definitely interesting to see the regional differences in funeral customs.
I have been to a couple at this point in my life and both were different. For my grandfather's funeral it was along the lines of an open house at his home with food that the neighbors and his civic organization dropped off....and there was a ton of it, but it was all finger food and nibblies to be eaten off of paper plates, during a quick drop in visit after the private interment.
The other funeral I have been to was for my DH's grandmother, in which a luncheon was paid for by the oldest son for the immediate family at a local buffet restaurant. Since my GMIL had 8 children the immediate family was VERY large. I don't even want to speculate the size of the bill, I am assuming that he might have gotten some help from their church to host it.
I kind of see the tradition of a post funeral meal dying in a lot of areas as people aren't as involved in churches and civic/fraternal organizations. Church attendance has been going down hill in a lot of denominations and the church ladies who run things are starting to die out themselves. I think it is also similar with civic organizations, the Rotary, Lions, VFW, Eagles, Elks, and Granges are just not as active in a lot of places, and the members are getting the point where they aren't as able to provide the same level of support to their members. Just in terms of the urban US, I would assume that funeral services are going to start later in the evening in order to accommodate working people who don't have paid time off. I can see a lot of external factors affecting how things get done.
In this case, it seems that there are some pretty major unpleasant family dynamics at play. I personally, don't see a problem with someone deciding to hold their own family dinner. Which is worse the family silently glaring at each other on opposite sides of the room and seething or just having separate post-funeral plans. I guess I just don't see the reason to do it "the way it's always been done" if it doesn't suit the person paying for the funeral.