Not sure exactly which board this belongs in, so please tell me if I should move it!

I finally "talked shop" with my FMIL regarding wedding plans yesterday, and she threw me for a bit of a loop. Originally my FI and I were planning an intimate, 60-75 person wedding, which fits both the vision we have and the budget we're willing to spend. The original plan was to give 25 invite to each side of the family, with 25 for my FI and I's friends and misc guests.
My FMIL and family are Indian, and she really wants to do a big 'invite the entire community to a big banquet hall' kind of reception (she originally said 300 people and I nearly fainted!). She was so excited about it, and i was so surprised that she was excited (I was expected a low level of antipathy, personally), that I found myself agreeing more or less.
My FFIL, who always seems to get how I'm feeling, suggested that maybe we can do the small ceremony/reception that FI and I want, and then the next week do the big hall reception, which they graciously offered to pay for. At first that sounded like the perfect solution, but then two things kinda came to mind for me, which is where I wanted to ask and see if this is a good or terrible idea :
1) Even if I'm having two receptions, I'm only having one wedding, which is my wedding day. So it's a bit weird to put on another wedding dress (even if its a sari that I don't personally associate as a wedding dress, obviously his family does) and "play bride" a second time, isn't it?
2) While his mom and dad made it seem like everyone would be really excited, and maybe this is a thing where there's a cultural difference I'm not aware of, wouldn't people feel slighted to be invited to the larger reception and not the smaller wedding/reception?
3) Even though our core family (immediate family members & bridal party) would definitely attend both, part of me doesn't like the idea of a "segregated" reception, where all the Americans are at one and all the Indians are at the other. And while my FMIL/FFIL offered to pay (and I think my FMIL is really excited at the idea of putting on a party), I don't want them to feel like they have to "pay to play", or that them financing everything is the only way to have the reception they think is appropriate (though on the flip side...I just cant brainstorm a way to fit the two concepts into one.)
FWIW, my FI is really driving the small wedding and is super excited about the venues we've been planning to look at and is kinda "eh its what she wants, itll make her happy" about the 2nd reception idea. I COULD always put my foot down and say "hey this is what we've planned, i want one reception, end of story", but it seems like a big bridge to burn so early.
Help?

Re: One ceremony, Two receptions?
I am in a somewhat similar situation. I am having 2 ceremonies (Laotian/Canadian) and 1 big reception mostly for my parents.
For our Canadian ceremony there will only be 100 people and those are the people who would expect to be invited to the ceremony. It is open to to everyone else who will be at the reception but from past experience they would not come. Those people are the people in the Laotian community who do not even have that particular ceremony unless they married someone who is not Laotian. They just have the Laotian ceremony which is not legal but for tradition purposes. I know most couples just go to city hall to make it legal either before or after. Here in Ontario a common law partner has same benefits as a married couple.
So if the Indian community is anything like the Laotian community they would not be offended at not being invited to the legal ceremony. I say have the Indian ceremony in addition to the legal one which is a huge production in itself. Have the huge reception for everyone. We called it our marriage celebration on our invite.
I was a part of a WP where B&G got talked into doing this. Their ceremony was on Friday, they had about 250 people at their reception (so more people than yours). The first reception consisted of friends and families of the B&G and people who actually cared about them. But then Bride's father insisted they do a big 10 course meal at a chinese restaurant (typical for our circle of Vietnamese/Chinese family and friends) for their 2nd reception. The second reception was on a Saturday. The bride and groom knew about 20 of the 220 people who were invited to the second reception. The 2nd reception was not for the B&G it was for the B's dad to just show off to his friends, most people at the 2nd reception didn't even know the B&G and only came because they knew B's dad.
1) Would you enjoy going through all the craziness of a second reception? That means postponing a honeymoon. I wouldn't do it. It's just another version of a PPD. You'll be so done with weddings it won't be even funny.
2) Yes people will feel slighted. Why wasn't I important enough to attend the second reception?
I think having two ceremonies to honor different cultures is awesome, I don't think two receptions especially in this case would make sense.
This is definitely something I would forego.
Now if your FI would be the one expressing interest in the large reception...not MIL...I might feel differently. It's nice that she's excited, but it doesn't seem to fall in line with you and FI's plans.
I agree with CMGr. our families are so far apart, there isn't anywhere they would all be able to get together under one roof. so we are having two receptions in two different states. One ceremony. But I will not be wearing my wedding dress for the second, just a white sundress.