M.,
Sorry you are having such a tough time with this. I agree with the neutral location ideas already given: church hall or a covered pavillion at a local park maybe? You can also
keep the party relatively short (some snacks and cake after the ceremony, then you're done, if you want).
This event is about your child being Christened. It is about your child being part of your and your husband's family. If members of that family cannot see past other issues to recognize this, that is their deal. You will choose who you feel is best to be your child's Godparent. That is that. If absolutely necessary, you can have your other sister be a part of the festivities another way (i.e. be the designated Aunt whom your 3 1/2 year old gets to sit with during the ceremony).
I can relate somewhat...my husband's parents don't speak to each other. They were both at my two daughters' baptisms (though not for long). Also, my second daughter has just one Godfather and no Godmother, due to various family issues. Gotta love it! : )
Best of luck to you - you are a good Mom!
S.