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I DEFINITELY don't think you're overreacting!!! Your parents are paying for a nice wedding and your fiancee is paying for the honeymoon, etc. It is traditional that the groom's parents pay for the rehearsal dinner, and I think it's awful that they are putting up such a stink about it.
However, it is a very sticky situation considering they will be your inlaws and you will have to deal with them in one way or another for the rest of your life. I think you should sit down with them and talk to them about it. Let on (not directly) the cost the wedding is going to be for your parents. If it seems like they are not having the $600 price ticket, ask tham what they can afford. Then, if your parents are willing, have tham foot the rest.
Hope everything else goes smoothly in the wedding planning process!!!
LIOB
Miegan
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