If I were in your fiance's situation I would tell my parents that I appreciate the gift, but can only accept it if they are willing to step aside and stop trying to make the decisions regarding the dinner planning. If they want to set some limit on the amount the dinner can cost, that seems reasonable. I would not, however, accept a gift that creates such stress. That is not a good way to begin your marriage. I think your fiance needs to be the one to handle this, since they are his parents. It sounds like you and he are in agreement, so it shouldn't be a big deal as long as he is ok with standing up to his parents.
It sounds like the long term relationship with your in-laws could be a more complex problem to solve. I think that accepting this gift on their terms may make fixing the long term relationship more difficult.
One key thing to determining this is based on how your fiance views this situation. If he really wants to remain close to his parents, then it is going to take a lot of effort to get this straightened. If, however, he has no desire to spend time with people who treat him and his wife poorly then the solution is easier.
If I were in this situation I would tell my parents that if they want me, my wife and future kids in their life then they are going to have to start treating us differently. I would explain that I am starting my family, and am not going to put that at risk to continue a relationship with parents who don't seem to be putting forth effort at making the relationship work. I would leave it in their hands, to decide if they were willing to make the kinds of changes needed to be part of my new family.
I have discussed these things were various people, and most often I find that others don't agree with my viewpoints on these. So I would suggest considering other advice, since my advice may not be right for you and your situation.
Good luck.
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