My daughter's future mother-in-law is insisting that they get to pick the restaurant of their choice for the rehearsal dinner..."they're not out to impress anyone".
Here are some of the problems:
1. Nobody in our family cares for the food at this particular restaurant (a family-style buffet...not the best atmosphere for a rehearsal dinner...not conducive to toasting the bride and groom).
2. The groom's parents believe that there are only going to be 20 people at the rehearsal dinner (ONLY the bridal party and the parents of the bride and groom)...and that if anyone else would like to go, they'll just have to pay for their own dinner (that includes spouses and significant "others" of members of the bridal party). The actual count is closer to 35.
3. My daughter and the groom's mother have had ugly words over this situation and, unfortunately, the groom's mother has put her son in the middle of an argument between herself and his bride-to-be.
4. I understand that it is customary for the groom's family to host the rehearsal dinner, but my husband and I feel this dinner is for the benefit of our daughter and that if that's the best they can do, we'll just pay for the dinner at another, higher-class restaurant, where the guests will actually enjoy the meal they are served.
Yikes! This has blown up into a big problem. Although traditionally the groom's family hosts the dinner (party), it is not a law that they must. Perhaps this couple really cannot afford to do any more than this. If that is the case, the groom could explain that the party need not be a dinner at a restaurant. It could be any sort of get-together where toast can be made and everyone relaxes before the big day.
Having said that, it appears from what you have said that this is a touchy subject. I assume that the one thing any of you would not want to do is to alienate the groom's parents. You will all be one big family soon. The choice of restaurants may not be the best for toasting and rejoicing, but perhaps this is something that everyone can adjust to. They are offering something.
The biggest problem really is that the significant others of the attendants are not invited. From what you have said "ugly words" were spoken about this. My suggestion would be for the groom (without your daughter involved) speak to his mother. Your daughter and groom could offer to pay for the extra people. If you offer it would seem as if you are trying to better them. Same goes for telling them that you are going to take the 'party' to a nicer restaurant.
This is only one evening out of a life that your daughter and her husband-to-be will be enjoying together. If there is some way to pay for the significant others without insulting the groom's parents, it would probably be best for everyone to just go.
My favorite rehearsal dinner was pizza at the bride's home. Her and her groom hosted their wedding and was on a tight budget--there was no family involved. So, we all sat around with our pizza and merlot, toasting the couple and enjoying every second of the evening.
I am so sorry. There are a few issues here I am going to try to address each one.
First, your daughter's fiancé should be the one to stand up to his mother. Otherwise he will find his life torn between his wife and his mother.
Second, the guest list needs to be fully discussed. If the hosts think there is only 20 and there is going to be double, that needs to be addressed.
Third, a rehearsal dinner should be in a private room.
Fourth, the hospitality of the groom's family should not be scoffed at or belittled. They may already feel like they are losing their son and they are not a big part of any of the wedding planning.
So, what I recommend is that the bride and groom speak with the groom's parents. Perhaps you need to give them a face saving way to still host the party they want to host. The groom should tell his parents that there are a lot of out of town guests who will need to be hosted right before the wedding and would they be willing to move the "rehearsal dinner" to the day before. The groom's parents will host the dinner they can afford two nights before the wedding at the restaurant they choose. You and your family go, even if you can't stand the food. They you host a "hospitality dinner" the night before the wedding including all those you feel should be invited.
Rehearsal Dinner Cheapos
Nobody in our family cares for the food at this particular restaurant (a family-style buffet...not the best atmosphere for a rehearsal dinner...not conducive to toasting the bride and groom). 
My daughter and the groom's mother have had ugly words over this situation and, unfortunately, the groom's mother has put her son in the middle of an argument between herself and his bride-to-be. 
