If I recall correctly your husband has just finished service in the military and is now is school? So as well as tuition, his benefits include a living stipend? If so, he is contributing to the household budget even if he is not working.
I agree, and I kind of shudder at any illusions people are making to it being the OP's money so her call as to whether they pay or not or even attend the dinner. I know I said "he who has the gold makes the rules" in my post, but I was referring to the OP and her husband
versus the MIL, e.g. they
are the ones paying therefore they
are the ones who decide on the location and guestlist as opposed to the MIL. Definitely not that it's the OP's money so she can decide whether or not they do it at all and veto her husband!
In many households it's the reverse, the man is the breadwinner, but that doesn't mean the woman can't decide to treat her mother to dinner out, the one working outside the home doesn't get to make all of the decisions on where the money goes. That's a relationship
decision in terms of how money is handled and budgeted, not etiquette. The etiquette of the matter is about the MIL and her voluntelling them to host, and how they handle that. *If* they decide they are going - and again, that's a relationship
decision, if it's important to the DH it's up to the OP to decide whether to take a stand or not - then it's more about what terms they host on and if they do try to make changes to the event to make it more appealing to what they want.