Perhaps can try to explain (patiently) why you guys dun want a hotel banquet, but put in all the positive reasons to show that you guys are also thinking for them when you decided not to have hotel banquet.
eg. "Since you have said it's up to us whether to throw a banquet or not, we have decided to go for a high tea because:-
(1) banquet would end quite late for the guests, high tea easier to mingle around and talk (more qin1 qie4), vs banquet the 10 pple just sit together at a round table;
(2) at a high tea reception everybody is in a more relaxed mood;
(3) assure them that high tea still need to dress up quite a bit and still can look glam [coz that generation may be thinking that high tea = dress sloppily = poor, kinda thing];
(4) the food from the venue/caterer you guys have chosen is very nice / healthier than hotel food [which can be quite starchy];
(5) it's not that you have no money for hotel banquet, butyou guys would rather save up that amount for their grandchild's future....
(6) your both groups of friends / your (Nellie's) relatives prefer high-tea to hotel dinner banquet [if they say "why listen to ur frens - it's ur wedding", then you guys can also say "exactly...! it's our wedding, so that's how we want to do our wedding..."]
things like that lah... Say all these with a smile though...hehs. coz if ILs see us black face with them, it will never end manz...
Or if they insist, perhaps you guys can suggest to them that have a small dinner banquet for family only. Your friends and ur family (bride's family) don't like banquet style. Then maybe they will realise that it's not so worth to have a banquet just for their own side and their own friends.
That "ultimatum" you issued ur FH may not work...it might just end up making things worse. Coz then the parties involved may remember this one issue, and the r'ship is not good. Stress your FH out also, coz he caught in between leh. Some pple of that generation is like that. Can't change them. Can only change our expectations. So perhaps you guys can start by reasoning with his parents first...and see how it goes? Maybe within the next few months, someone might invite his parents for a high-tea reception too, then they'll change their opinions...
Dun feel sian...there's a solution one...Impt thing is also, what's ur FH view on this whole thing lorh.