UPDATE 1/19/2014: As previously mentioned, we made the command decision not to invite FSMIL's siblings to the wedding (FSMIL's brother is a racist jerk whom FI did not anywhere near our wedding. We agreed to invite FSMIL's sister and hubs, only to have FSMIL pushing us PA to get all her fam in; realized she would not let up, and it would ultimately cause offense to invite one and not the other). FI had sent text to his dad, saying neither would be invited, and got a response of "it's your wedding, your call." We were under the impression that he told his wife, as she was distant for a few days/weeks.
Tonight, we had FFIL, FSMIL, FBIL, and FSIL over for dinner/ FBIL's bday. FBIL and FSIL are getting married in September, and naturally, the convo turned generally to wedding stuff. I told them about my numbering rsvp cards and creating a spreadsheet, as well as the fact that we had a lot still to wait on (deadline is 1 mo from today). FSMIL asked if we'd heard from her fam. We said we got her Dad's (and told her he was invited to the RD). She inquired about her sibs, and FI told her we had not sent them invites. (I did say we had wanted to talk to her about that when she'd sent the texts.) FSMIL got quiet, but when FI went to handle some dishes, she went in there to question/grill him (after he's had several beers). It appears FFIL never told FSMIL about our decision. FI mentioned how little she said positively about the sibs, and that ultimately, it wasn't about her. She was quiet (aka didn't say a word to us) the rest of the evening, though I got two hugs from her before they all left, and FI got a very per functionary one. We're sure she's pissed, though she heard me when I went to the kitchen and said "I think FSMIL is upset, you need to talk to her more" to FI" because she called out "Don't worry about it."
FI is supposed to have lunch with her tomorrow (I did ask her where they were going, FSMIL said something along the lines of "idk where we are going, or if we are"). He feels he could have handled things better. I've said if she brings it up, to tell her we're sorry, didn't intend to hurt her feelings, but while we were ok with inviting the sister, we were not ok inviting brother; also say that her texts made it clear we couldn't invite one without the other, and we had to make the decision to not invite either, again emphasizing that this was not to hurt her. FI doesn't really want to mention the fact that his dad knew, as he doesn't want his Dad to get in trouble with FSMIL.
FI's feeling is that the wedding day is about the two of us being happy, but I am feeling bad that she found out like this (FI is of the belief that she knew, but is "faking" the surprise about it).
FI is interested to hear the thoughts of the knot ladies following this update, as am I. RSVPs are due in a month. Should we send the invite to the sister? Leave things as is? If FSMIL keeps the lunch date with FI, should he add anything to what I suggested if she brings it up? Or something else entirely?
Edited for more info: FI recalled her saying something to him in the kitchen along the lines of how now "she was going to look like a jerk/look bad." We think perhaps she jumped the gun and told her sibs they would be invited, and now she's got confirmation that they are not. FI wondered what we should do- I reminded him that it is on FSMIL to explain to her sibs, but the fact remains we sent invites at the 3 month mark in Dec., and received a prompt response from FSMIL's Dad. As noted below, FSMIL's brother lives with the father, and the sister and her husband live two doors down. They should be perceptive enough to realize if they haven't gotten an invite yet, they aren't getting one.