I posted here:
http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_customs-traditions_another-rehearsal-question
ANYWAY, I'm happy to say the issue was solved! She booked a new venue yesterday (all on her own) to accommodate more people and her sister who is having surgery in August. There are also more bathrooms (which was a huge issue with my FFIL because he has some GI issues and needs a bathroom nearby...
She had talked about booking at a new venue before, but I got nervous because she had barely researched places, and presented the first half-ass place that was available for the day we needed it. That was the part that was most upsetting to me in the whole ordeal. The new place is a small restaurant (actually one of my mother's favorites!) right on the main street in the town the wedding is in. It is more what I had envisioned in a rehearsal from the beginning. It will accommodate more people, has a better menu and will be extremely convenient for everyone staying in the surrounding hotels.
I feel sooo much better!