Vague also hit the nail on the head above....it´s not that your OH is being the bigger person, but that he won´t stand up to them! And now you´ve given some background it all becomes clearer, the relationship has been fucked up his whole life by the sounds of things.
The typical; child always seeking approval, love, affection, praise etc but getting naff all in return, only disinterest and negativity. Maybe he had high hopes of finally getting his parents to show some love and thaw out their frozen hearts when he had a baby with you...but look what´s happened! They STILL show no interest in him, or you, only the baby!
It sounds like the relationship btwn your OH and his folks has been one sided all along, with him being the only one doing the loving and consideration. Yes I´m sure there´s many examples you could give.....For e.g, is it always him that sends them thoughtful presents on Xmas/birthdays, and does he get anything on these occasions I wonder?...Wouldn´t surprise me if it´s always him making the effort for precious little in return. They sound cold and heartless, and destined to find fault with everyone and anyone other than themselves!
Narcissistic would you say? I´m no expert but the 2 of them are a match made in heaven, how the hell did they find eachother?? 
Does your OH have any siblings? What are your friends telling you to do about the whole mess? I´m sure they must be saying the same as us. Yes you´d do right getting some literature on this stuff. He sounds well and truly blinkered to their awfulness, but he´s been brought up with them!
I hope you can instigate change and improve things cos it´s certainly just gonna go on and on and can you really bear that? Staying out of it is condoning it, but you´ve had some great advice on here so it´s over to you now.
BTW, does your husband know you´re posting about this on MN? Would he care or be angry if he knew? Just wondering if showing him the thread might help? He needs some different perspectives and some insight from others, although I´m sure he´s getting that from real life friends and your family. Does he have any other family members who also think this behaviour/situation is massively abnormal?