Not sure if you're responding to me, Kings. But, I'll answer.
The polite thing to do would be for the waitress to quietly say to the party in question, "I'm sorry, but it appears that we have a back up and need this table for a large party that has a reservation for it. Would you mind if we moved you to a smaller table/to the bar/whatever, so you can continue to enjoy your conversation?"
It's completely possible for the restaurant to handle this in a polite way. What the waitress - and the FMIL did - was highly inappropriate in the situation.
Thank you, Dottie, I really agree with your answer.
Additionally, if I was one of the waiting party, instead of accepting the ridiculous "half-seating/half-waiting" arrangement, I'd have said "No, thank you. We will wait at the bar while you resolve this situation." Said with a smile, of course.
The waitress may have already attempted to politely inform the lingerers that another party was waiting/coming in. If that was so, then other than bodily throwing them out, there wasn't much she or management could have done differently.
Though, had I been one of the people waiting, I also agree that it wouldn't have been unreasonable to walk out either. Then again, with the wait times at other nearby restaurants being long also, especially without a reservation...and having to start over from scratch elsewhere, delaying the meal even longer...I don't think the FIML's comment was out of line either.
The only difference between she and I, in that situation, is that I may have expressed myself as my feet were heading for the door...after I'd rousted the other four in my group, who'd already been seated!
It would have to be one heck of a cup of coffee the lingerers were having, to make up for the revenue lost from serving 8 dinners!