I have to say that I agree with the suggestions that if the ILs are giving you some money towrds the cost of your wedding, then they should get some say on who they want to invite.
When DH and I got married, we were ruthless, and said - this is how much we are all contributing (we put in the same amount as both sets of parents), so this is how we will split the guest list.
It meant that my parents got to invite some of their close friends (who I had known since a baby, but also some that mum / dad had got close to since I'd left home) as I have a smaller immediate family than dh, the PILs invited only family (many random relatives who I'd never met, despite having been with dh for 6 years before we got married), and we then invited our friends.
That worked well for us ... my ILs can be very manipulative (well, my MIL can), but when we sorted out the seating plans, we made sure that the people we didn;t really know weren't sat right in front of us (that caused some commotion with MIL - she felt that members of her family should be put before people like the ushers and bridesmaids in terms of seating ...
As for Christmas, we used to alternate before ds was born - we live in South Wales, and the ILs live in West Wales, while my Ps used to live in Birmingham - so we did the roadshow.
I couldn't be doing with that anymore after ds was born, so we anounced to everybody that we would invite everybody to our house for Christmas. MIL sulked for 2 years about it - she pouted that she'd never been away from home for Christmas, that it wasn't fair to make her move, that my parents had got my sister so they didn't really need me around too (that one made me !), etc. etc.- but we stood our ground, and eventually she came around, and we've had the last 2 Christmas at our house with both sets of parents, and my sister.
Now that dc#2 is on the way, it's even more important for us that we stay home - I don't fancy packing 2 smalls into the car with all their presents ...
Good luck with both issues - and I have to say that I suggest that it's your dp (dh to be) who should talk to your future MIL about this one - although he will find it very difficult. I will only say that dh found it horribly difficult to talk to his mother like that (she's the kind who puts on the tears / sulks / doesn't speak to us for months about trivial issues) - but having done it once means that he feels more able to do it again.