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Wedding Etiquette Forum

Etiquette advice - small wedding + engagement party?

Hi - 
My fiancee & I are having a very small wedding & have already booked our ceremony & reception spaces. We've gotten a little grief from family members about the size of our wedding (it being so small that we aren't including any cousins), as they don't feel it's fair. (I have MANY cousins & they all have MANY kids; our guest list would more than double if we invited them all to our wedding, which is way out of budget for us) 

I was hoping to find out if this was a huge faux pas or not: I was thinking of having an "engagement party" a few months before the wedding. This party would explicitly say "NO GIFTS" so people don't feel obligated to bring anything other than themselves & kids, so they can enjoy a night of food, drink & fun. It's just an idea to include everyone in on wedding festivities who we cannot invite on the actual day. I know that having an engagement party & inviting people who aren't coming to the wedding is normally a huge etiquette no-no, but I was hoping with the note of "no gifts, come as you are and have fun", would keep things casual & frustration free. Am I living on another planet in thinking this is OK, or is this a huge no-no?

Thanks!
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