I am an older woman--63--and a religious person myself. Your father-in-law sounds like a textbook case of negative attention-seeking. You said yourself that these behaviors coincide with his cancer recurrence. My hard-to-get-along-with father-in-law lived with us for a number of years before he died in our home. He was really cantankerous and taught me for sure that you aren't going to change an older person.
The only thing is to take control yourself by being proactive and not reactive; he wants you to be reactive to give him attention. If you could figure out some way your family is comfortable with giving him attention and take charge by pulling that off, your husband will have fewer regrets and feel better about himself after his father is gone, which, I think is part of the problem--how to conduct himself with his father and not create a lot of rotten memoriesand regret.
I find that dealing with an unchangeable person is aided by thinking up a pat statement that will put them off but with which I can live. Say it in a tone that is non-confrontative and repeat it as necessary. This technique is known in some quarters as "broken record." I've had it used on me very successfully. It shut me up quite well! Maybe try is "Let's agree to disagree." If it's good enough for him, you ought to be allowed to use it too.
This kind of situation is so difficult! Remmber that you will be alive a long time after he is gone and will want to live with yourselves without regrets. Maybe at moments when you aren't in conflict, you can risk the peace by talking a little about the process rather than the content of your exchanges. One of the things that really would help is if you could get him to promise not to mention religion or politics again. You could even be so bold as to say something like this: "Dad, we want so much to create happy memories with you and find that when politics and religion are introduced as discussion topics, a lot of hard feelings arise. Is there any reason why we can't agree that they are off limits?" Then you might suggest some alternate arenas which are fodder for conversation. Maybe his childhood memories, or memories of the early years of his marriage, or other things that center on him. This will give him positive attention. I have found that that beginning "Is there any reason why. . ." is an excellent intro to a difficult situation.
There is absolutely no reason to try to argue with this man. It will get you nowhere. I once had a psychotherapist who gave me the following illustration of this: He said that, if I own a dog who digs under a fence and escapes, I would not beat the dog or scream at it but rather rebuild the fence and/or fill in to prevent a recurrence, because I know THAT'S WHAT DOGS DO. That phrase has become a mantra for me when I deal with ornery people, especially older men. I realize they are not going to change because "that's what dogs do." Somehow this tale and moral encourage me to save my energy and take back my power from them.
God bless you and your little family. I will pray for you!
M.