It's not her wedding. If/when/she did get married, her wedding, her choices.
You don't even have to have a confrontation. Send her and your sibling an invitation, put in an extra note to say that you really really would like her to be there and if there's anything you can do to help, given her difficult circs, you'd be happy to do whatever you can. Now, a normal person would take 'anything I can do' as 'anything I can do that you can't' and wouldn't assume that it would involve you paying for a private air ambulance for her or something.
Lots of people you invite won't be able to come because it's expensive going abroad for someone's weding but of course you understand that, and won't throw a tantrum about it. If your SIL has the hump, that's her business. You are not responsible for her feelings or her reactions. This is unfortunately a situation where she might be unable to attend and only the weirdest person would be upset at not being able to attend the wedding of a woman they clearly dislike.
So I would extend an invitation, and stop letting her have this power and control over you, which has extended to you being afraid to have the wedding you want. And that's a big shame, isn't it? When you look back at your wedding photos, will you be happier with your perfect wedding in Italy, or a lovely wedding closer to home, with your SIL scowling in the background? Do you want to look at photos and think 'well, SIL hates us, but we had a lovely wedding' or 'it was a nice day, worth the sacrifice to keep SIL happy?' Because if SIL is as volcanic as you suggest, she might just try to find a drama wherein she is the victim and you and dh are the baddies, even if you let her plan the whole thing. And for people like that, they wait for you to do something, then work out how they can cause you bother and garner sympathy for themself.
OK I'm now massively projecting, but think about what the likeliest scenario is, and think if it's worth it.
I'd be interested to know what has caused the fall out, too.