On the current line of discussion, I can't imagine getting a hotel for an event less than 2 hours from home, even one that went pretty late into the night, so I would be surprised if anyone other than your in-laws is interested in the block. But I suppose you know your guests better than we do.
Generally, I'd say, two months should be plenty of notice where the majority of guests' decision regarding the hotel isn't going to define whether they're able to attend in general.
I can totally see how this would seem strange, but it's not uncommon around here to just stay in the city overnight even as a local.
For example, we live 20 minutes from Minneapolis, my husband's office is there, and we're both in and out of the city throughout the week, so it's not a novelty to go there. On Saturday night, we drove the kids an hour away (literally right past downtowns Minneapolis and St. Paul) to a party at a friend's house and never would think of getting a hotel near their house. But next month we've got cheap show tickets in Minneapolis on a Saturday night, so we booked a room to stay over just because. That factor multiplies around here if you're going to have a couple of cocktails during the evening.
But you don't do it every time you go into the city, some people never do, some people very often do...kind of hard to describe, I guess.