Whose decision was it to have no alcohol? I think everybody needs to figure out a way to get along. If he doesn't want to dance, don't make him dance. Everybody has quirks. You are right in keeping this in the perspective of a long marriage. What "the guests expect" should have no bearing on your decision.

I think that turning this into a power struggle between you two and her father would be a huge mistake with the potential for lingering consequences.