"Kids love weddings/receptions - it's just a big party"
If that's true, why did my DD spend the whole time of the last wedding we went to moan that it was boring, and when could she go home? She found the hour long church service boring, the grown up meal boring (no children on the table, in a very adult environment), she found the speeches boring. In fact, she only just started having fun in the evening bit, just before we went home! In fact, at four she was required to 'sit still and be quiet' for 3/4 hours that day, and she was bored out of her mind. What four year old enjoys that?
personally, I think that kids are better left at home for weddings, and I always try to leave my kids behind - I only take them when I can't get childcare. It is just too stressful for everyone involved - the child who has to be on their best behaviour all day, and have no space to really run around / let off steam, and also stressful for the parents who have to tell off the kids when they are trying to run around and let off steam, usually at inappropriate times, like in the middle of the speeches!
That said, I agree with the OP that the SIL is being off - one rule for everyone in my book, and I personally wouldn't rule out family children from a wedding, although I can see why one would (and indeed would want to) for the children of friends.