Reading all of this makes me somewhat glad I don't have a father in law. Mind you I do butt heads with my mother in law but it has never been a source of contention. Little things like letting our kids eats butter packs at restaurants or some such silliness.

I think you have a lot of good advice in this thread and I also think that finding a place of your own (for you and your wife) may improve you relationship with you inlaws.