Again. This sounds great on paper and all that, but in the real world, it depends on who you are dealing with.
The OP's In Laws may not view it as him being the better man, they may view it as a sign of weakness, and given how petty they seemed to be about the car issue, they may even view him willing to compromise at all as a sign they have "won" as he has "given in" and this will only serve to entice them to continue to do what they are doing in a means to get manipulate him.
The major difference here is that these are the in-laws, not someone he will be able to "brush off" /squelch, later if they decided to throw his act of kindness back in his face. They are going to be around weather he likes it or not, for a long time.
Well, sounds like you and your partner talked it out enough to be on the same page. That's good.
One point to add - if she starts now "growing up" and giving them a piece of her mind, they're going to blame you for "turning her against them" at first instead of being happy that she grew strong enough to confront them, so please be very careful about that. It would be best if you can resolve the issue with the dad yourself, or if she manages to help with that without further hurting their feelings - yet. They're going to be even more irrational about it otherwise so you have to be prepared.
Good luck!
Please split the class forums into REAL subcategories this is a jumbled mess.