Ewwww...
Been there, done that, NOT fun. I don't think there's anyway to gain control of the situation without causing friction -- either with the hubby or with dad-in-law. My husband is the same type as yours - hates confrontation with the parents. I finally laid down the law a few years back. Yeah, hubby didn't like me standing up to his dad, his dad didn't like me standing up to him......they got over it. Luckily, my father-in-law did pay attention to what I had told him. It's tough to do too when you're empathic and don't want to cause hurt feelings. It's either hurt feelings that will soon enough fade away or discipline problems for a long, long time. I don't envy you!

Good luck!